Global Markets:

  • Asian stock markets: Nikkei is up 0.90 %, Shanghai Composite fell 0.20 %, Hang Seng rose 0.10 %, ASX gained 0.60 %
  • Commodities: Gold at $1301 (+0.10 %), Silver at $19.65 (+0.10 %), Crude Oil at $94.11 (+0.40 %)
  • Rates: US 10 year yield at 2.396

News & Data:

  • New Zealand (NZD) Producer Price Index – Output (Q2) (q/q): -0.5%, Expected: 0.8%, Previous: 0.9%
  • New Zealand (NZD) Inflation Expectations (q/q): 2.2%, Previous: 2.4%
  • RBA releases policy meeting minutes, repeats most prudent course of action is period of rate stability
  • RBA says noticeable easing in financial conditions this year, number of forces working in different directions
  • RBA adds output growth probably somewhat softer in near term, A$ high historically offering less support
  • RBA says firms relucant to invest until sustained demand pickup, GDP growth likley slowed to more moderate pace in 2Q

FX Update:

AUD – The main message from the RBA minutes is that the bank remains comfortably on hold, as it repeated that “the most prudent course was likely to be a period of stability in interest rates”. The RBA expects that, after a strong start to the year, growth would be softer in the near-term, before picking up again. Consumer spending is expected to grow moderately and growth in non-mining activity expected to continue to improve. Inflation had been higher than expected in June, but the bank remains comfortable with the underlying inflation outlook. Traders are now waiting for tomorrow’s speech from RBA Governor Stevens at his semi-annual testimony to the House of Representatives Econ Committee. AUD/USD consolidated in a 0.9315-25 range ahead of the minutes. After the release, the pair gradually rose towards 0.9340 driven by demand of leveraged names. Bids in good size noted towards 0.9280. Topside stops above 0.9360, but offers from various names located at 0.9380 up to 0.94. Cross flows were supportive with strong AUD/NZD buying overnight. We finally had a clear break of the 1.1050 level, but the pair stalled at 1.1075 resistance. However, with Kiwi weakness likely to persist in the near-term, AUD/NZD has good chances of reaching 1.12 soon.

CAD – USD/CAD holding well. Specs have been less aggressive buyers, as we have the Jackson Hole meeting starting on Thursday, but downside momentum is failing to build. This suggests we will see another round of consolidation until Yellen’s speech, unless some of the upcoming US data releases bring a big surprise. Leveraged and corporate demand into 1.0850, large stops beneath that level and through 1.0840. Better offers at 1.0920.

CHF – EUR/CHF has bounced off 1.2085 and is slowly approaching 1.2120 resistance. USD/CHF has good offers ahead of 0.91.

EUR – A quiet Asian session for EUR/USD, as usual. Bears have difficulties pushing the pair to fresh lows amid crowded positioning. Barriers at 1.3325/30 and 1.33 will additionally slow down price action. Banks are talking about sovereign demand resting between 1.3330 and 1.3340. Large stops sub-1.3330, but bids again ahead of the aforementioned barriers. To the topside, offers at 1.3380 with key intraday resistance now at 1.3410.

JPY – A major Japanese bank was an early buyer of USD/JPY and pushed the pair to a high of 102.64. Solid offers appeared on the e-platforms and it retraced back to 102.55. Talk of bids in good size sub-102.40, while offers seen 102.80-103.00

Upcoming Events:

  • 08:30 GMT – UK CPI (-0.2 % MoM, 1.8 % YoY)
  • 12:30 GMT – US Building Permits (2.5 % MoM, 1M)
  • 12:30 GMT – US CPI (0.1 % MoM, 2.0 % YoY)
  • 12:30 GMT – US Housing Starts (8.6 % MoM)