Forex: Daily Wrap Up – Lacking updates, USD lacks direction against peers
iNVEZZ.com Friday July 19th:
The euro has fended off pressure from the US dollar so far today, with the pair trading mainly above the 1.31 barrier. The intraday high at 1.3151 first reached in the Asian session was revisited as New York trading got under way.
The single currency found support at 07:00 BST with the release of the German PPI for June. Producer prices for industrial products rose by 0.6 percent y/y, consumer non-durable goods increased by 2.6 percent and intermediate goods were down 0.9 percent for the June year. In May the overall rate of change up 0.2 percent, in April +0.1 percent. Month-on- month, the index remained unchanged in June after a 0.3 percent fall in May.
The day has been empty of further European updates, with nothing in the US calendar either, giving the market little guidance on where to take the greenback.
The yen strengthened against the dollar in Asian trading today, falling from a high at 100.86 to 99.81, a tad over one percent. As the New York session got under way, the pair moved back closer to the 100.00 barrier.
Sunday’s elections for Japan’s upper house are likely to give Prime Minister Shinzo Abe’s Liberal Democratic Party and its coalition partner New Komeito a controlling interest, according to a poll published in the Nikkei newspaper on Wednesday.
A set of updates were released during Asian trading hours today, broadly supporting the yen against its major peers.
Japan’s Foreign Bond Investment data for the week ended July 12 revealed that the country’s residents bought a net ¥1.1 trillion’s ($11 billion) worth of foreign bonds last week, with total holdings now amounting to ¥5.6 trillion, the highest level since 2005.
Foreign investment in Japan stocks, also for the week ended July 12, came out as ¥398.2 billion, substantially down on the ¥485.3 billion in the prior week.
In addition, the Japanese Leading Economic Index data for May came out at 110.7 (revised up from 110.5) from 107.7 in April.
And Japan’s All-Industries Activity Index for May m/m registered a seasonally adjusted 1.1 percent rise, from 0.1 percent in the prior month (revised down from 0.4 percent) but below forecasts for a 1.3 percent rise.
Sterling has firmed today against the dollar, hitting 1.5281 ahead of the American opening and notwithstanding increased demand for the greenback amongst North American traders. So far in American trading, the pair has stayed at highs in the 1.5260/70 zone.
The UK government budgetary item Public Sector Net Borrowing (excluding temporary support for banks) was today reported to have fallen to £10.234 billion in June, some 20 percent down on the £12.770B billion logged in May. The number wasn’t good enough for analysts though – they’d been expecting £9.450 billion.
Benchmark 10-year gilts yielded 2.26 percent early in London trade today. The rate has dropped seven basis points during the week.
The Swiss franc edged higher against the US dollar in Asian trading today, with the pair falling to 0.9407 ahead of the London opening, but the momentum wasn’t sustained and the price then retraced to 0.9443. But the franc has found new legs in the American session, and the quote is once again close to 0.94, at 0.9410.
The latest Swiss external trade update, released yesterday, appears to have provided some of that support, although the overall picture was negative.
As reported by the Federal Customs Office, exports fell by a real 5.5 percent in June to CHF16.707 billion and imports fell 6.5 percent to CHF13.975 billion.
However, month-on-month the June numbers pointed to a modest uptick in demand from the Eurozone, with exports to the bloc inching up 0.9 percent after posting a fall of 1.1 percent in May.
The Australian dollar rose sharply against the USD today ahead of the American opening. The pair advanced almost 70 pips in around fifteen minutes, before retracing to 0.9193 after the session started.
The Aussie advanced today after the People’s Bank of China said it would remove the floor on lending rates offered by financial institutions, boosting optimism for a leg-up for Chinese growth and flow-on support for the Australian economy.
Market speculation continues that the Reserve Bank of Australia will cut its benchmark interest rate by 0.25 percent at its August meeting.
Expectations for the GDP update due out next week are for no shocks but the RBA has said more than once in recent months that it has room to lower interest rates further if the economy needs a nudge.
Canada’s dollar has gained against the USD today, with the pair declining to 1.0365 in New York trading so far.
The Canadian currency earlier experienced some discomfort after consumer price inflation in June was reported as staying below the Bank of Canada’s two percent target. However, later in the American session the loonie recovered to the day’s previous levels around 1.0370.
As reported by Statistics Canada, the CPI increased 1.2 percent in the 12 months to June, following a 0.7 percent rise in May and in line with analysts’ expectations. The rise in consumer prices was led by transportation costs, which increased two percent on an annual basis last month, after May’s 0.5 percent fall.
On a seasonally adjusted basis, the CPI increased 0.3 percent in June month-on-month, after rising 0.2 percent in May.
Core CPI for the June year was reported by the BoC as a 1.3 percent rise, up modestly on the 1.1 percent increase in May. The seasonally adjusted reading month-on-month was up 0.2 percent, following the zero percent change in May.
Futures for crude oil, Canada’s largest export, were up 0.8 percent to $108.95 per barrel as the American session started today, reaching the highest level since 1 March 2012.