Reserve Bank of Australia reduces rates as expected by 0.25% to 0.75%
Australian dollar drops, as does the yen with its sales tax hike going into effect today.
EUR/USD: Easing expectations out of the European Central Bank (ECB) keep the euro at the lows
Eurozone data yesterday showed its overall unemployment rate drop a notch to 7.4%, and preliminary Consumer Price Index (CPI) figures out of Germany and Italy worse than expected ahead of the overall CPI figure today that'll be released alongside final manufacturing Purchasing Managers' Index (PMI) readings, of greater interest given last week's preliminary shock that showed worse than expected manufacturing and service PMIs for the bloc. The net result is ongoing negative technical bias on both the daily and weekly outlook, with little needed to shift to an initializing bear trend as ECB easing is expected to continue. In sentiment, retail bias is at a heavy long 75% as shorts continue to dwindle and longs hold on.
GBP/USD: Finishing not that far off from the greenback
Despite weakness in other European currencies like the Swiss franc and euro, the pound managed to finish not that far off from where the session started, with little difference between it and the greenback in terms of overall FX performance. UK data yesterday confirmed contraction for Q2 with a -0.2% Gross Domestic Product (GDP) reading, and whereby money supply growth dropped, and lending increased at a slower pace. Today's data involves its manufacturing PMI, tomorrow construction, and services the day after. In terms of the latest Brexit news, the government has prepared an updated Brexit deal with some of its plans made public over the next few days. Should those plans raise the likelihood of a no-deal Brexit, and the pound may be under pressure again, with the pair’s price nearly below the last of its main moving averages (MA), the 50-day MA.
USD/JPY: Under pressure this morning as data remains weak and a sales tax hike goes into effect
Another set of Japanese data this morning, with the unemployment rate remaining at 2.2%, and PMI figures out of Tankan showing manufacturing and services better than expected but lower than previous, and Markit's estimate showing ongoing sub-50 contraction. And although there weren't any retail figures released (it was yesterday), future readings will likely take a dent given the country raised its sales tax from 8% to 10% today. Last time around it hurt its economy and forced the Bank of Japan (BoJ) towards easing, and the yen is weaker as of this morning. Attention now turns to the USD aspect of this pair (and other pairs in this report) where the Institute for Supply Management’s (ISM) contraction last month was a significant worry as the global manufacturing recession hit the US, and expectations this time around are for a slight above-50 expansionary figure.
USD/CAD: Ongoing oscillation in line with its current consolidatory technical overview
The Canadian dollar (CAD) outperformed compared to the other FX majors, but with the greenback in a close second it was only a slight finish higher in what was mostly a consolidatory session befitting its current consolidatory technical overview. This was despite energy prices dropping, which usually dents CAD’s energy underlying. In terms of data, Canadian Raw Materials Price Index (RMPI) and Industrial Product Price Index (IPPI) showed a 1.8% contraction and slight growth of 0.2% respectively. And this evening there will be its Gross Domestic Product (GDP) figure as well as oil inventories data should the energy commodity currency be affected by its underlying. Given the close proximity of its price to its main long-term and short-term MA’s means a cross will occur more frequently and offer false signals in the process.
AUD/USD: Australian central bank reduces rates by 0.25% as expected, aussie drops
Today morning's attention was on the Reserve Bank of Australia's (RBA) monetary policy announcement, whereby rate expectations were for a 0.25% cut to 0.75%. It didn’t surprise in this regard, and despite a brief pop higher the pair’s price is in retreat against the greenback, with further volatility expected as the RBA’s governor Lowe will be speaking later today. Australian data released prior showed Australian Industry Group's (AIG) manufacturing PMI beat its previous expansionary figure, but with building approvals posting a third consecutive contraction. The economic calendar will be empty out of Australia until Thursday's services PMI figure, with attention more on significant US data today through the end of the week.
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