Australia: The Australian Dollar has opened higher after the Reserve Bank of Australia (RBA) said the next rate movement was all but dependent on official inflation data due next week.
The AUD traded to USD0.8846 overnight after commencing it's rise late yesterday.
The minutes of the RBA's July Board meeting hinted a August rate rise was possible if inflation data came out higher than expected (the ABS is due to release the June quarter CPI report on 28 July), however the central bank said it expected underlying inflation to have fallen, even though the headline rate may come in higher.
RBA Governor Glenn Stevens spoke in Sydney and mentioned a lift in interest rates during the federal election campaign could occur if the economic data suggested such a move.
The board will meet on 3 August and will consider all the issues for the economy in assessing the rate scene.
Markets have not yet fully priced in an August rate rise that would take the benchmark rate from 4.5 to 4.75%, but one gets the feeling it's a real chance and moreso if next week's CPI is higher than expected, which will put the AUD under pressure to move higher.
With no market moving data due today, upward pressure on the AUD may ease with next support near 0.8750.
Majors: The USD was mixed overnight. EUR/USD is still below 1.300 after reversing gains following Hungarian Government debt auction took the wind out of the sails of auctions in Greece and Ireland.
GBP/USD opens little changed at 1.5275 following news UK Government borrowing increased further in June, USD/JPY advanced as gains in US stocks offset early losses and in Canada, USD/CAD fell following the rate hike by the Bank of Canada by 0.25% to 0.75%.
Worse than expected US housing starts led to US equities beginning the session down 140 points but the tone of the markets improved to see the Dow ending 75 points higher.
With no large particular event causing the change in mood, sentiment concluded the market had been oversold in the first instance. IBM and Goldman Sachs reported worse than expected revenue results but much of this was priced into after the Citigroup and BoA results.
The market is looking really closely at US corporate results for an indication of economic conditions going forward, whilst in Europe, debt sales as written above are a definite focus following the emergence of the sovereign issues earlier this year out of Greece. The uncertainty continues for all of us!