Wednesday 23rd July: European Open Briefing

Global Markets:

• Australia CPI QoQ 0.5 % vs 0.5 % f/c – YoY 3.0 % vs 3.0 % f/c
• Australia Trimmed Mean CPI QoQ 0.8 % vs 0.6 % f/c – YoY 2.9 % vs 2.7 % f/c
• Singapore CPI YoY 1.8 % vs 2.4 % f/C
• Japan Prime Minister Abe advisors urge for a 2% corporate tax cut
• UK Prime Minister Cameron says further sanctions on Russia being put into starting blocks
• Asian stock markets: Nikkei unchanged, Shanghai Composite up 0.20 %, Hang Seng rose 0.80 % and the ASX gained 0.50 %
• Commodities: Gold up 0.10 % at $1307.60, Silver down 0.10 % at $20.98, Crude Oil lost 0.37 % trading at $102.00
• Rates: US 10 year yield stands at 2.47

FX Update:

• AUD – AUD/USD fell to a low of 0.9380 in the early Asian session in anticipation of a soft inflation reading. The trimmed mean CPI came in higher than expected though, causing another short squeeze in the pair, which took it to 0.9435. The data doesn’t leave much room for further cuts by the RBA and we could see a test of the 0.9450 offers at the London open. The short-term bias towards the Aussie is improving after RBA Governor Stevens didn’t talk down the currency on Monday as most were expecting and now, this data release.

• CAD – Canadian Retail Sales data will hopefully get USD/CAD out of the 1.0725-58 range it has been stuck in the past three days. Bids from local corporate names and leveraged funds ahead of the 1.07 level, while offers seen resting at 1.0760 to 1.0770. It feels like the short-term market is long with plenty of trailing stops beneath the big figure, so risk is skewed to the downside.

• EUR – EUR/USD opened in Asia around 1.3465 and after a quick move to 1.3470 and back to 1.3457, it eventually settled again around that level and remained there for the rest of the trading session. There was plenty of action in the cross pairs though, with good selling in EUR/AUD and EUR/JPY, mostly from leveraged names. EUR/AUD fell 80 pips to a session low of 1.4258 and a test of the key 1.4050 support level seems imminent.

• JPY – Local exporters were early sellers of USD/JPY and short-term specs decided to join them. The pair hit a low of 101.38. Solid bids remain clustered below 101.15 down to the big figure, while the big stops are resting throguh 100.80. To the topside, offers 101.70-80 and then 102.00.

• NZD – NZD/USD moved a bit higher overnight on the back of the AUD/USD rally. The RBNZ is expected to hike rates by 25 bps to 3.50 % today, but signal a pause for the rest of the year.

Upcoming Events:

• 08:30 GMT – Bank of England Meeting Minutes
• 11:45 GMT – Bank of England Governor Carney speaks
• 12:30 GMT – Canada Core Retail Sales (0.3 %)
• 12:30 GMT – Canada Retail Sales (1.0 %)
• 21:00 GMT – Reserve Bank of New Zealand Interest Rate Decision
• 21:00 GMT – RBNZ Statement

Source: Wednesday 23rd July: European Open Briefing