Dollar treads water as financial markets are generally digesting recent moves. Mixed personal income and spending report from US provides little inspiration. Personal income in US had the biggest drop in four years by -1.3% in June, much worse than expectation of -1.0%. However, personal spending rose more than expected 0.4% versus consensus of 0.2%. Though, deflation risk continues to grow with headline PCE unexpectedly dropped -0.3% yoy in June, following downward revision to -0.3% in May. Core PCE dropped to 1.5% yoy from downwardly revised 1.6% in May. After all, while some consolidations might be seen, there is no change in the short term outlook in dollar and yen far.
Data from Eurozone saw PPI rose 0.3% mom in June, fell -6.6% yoy, basically inline with consensus. Swiss CPI dropped sharply by -0.7% mom, -1.2% yoy in July. UK PMI construction rose more than expected to 47 in July. Australia overnight with retail sales unexpectedly dropped -1.4% mom in June while house price index rose more than expected by 4.2% in Q2.
As widely anticipated, the RBA left the official interest rate unchanged at 3% for the 4th consecutive month. Moreover, the central bank has now shifted to a neutral bias on monetary policy from easing bias in previous months. Nevertheless, Aussie didn't receive additional support from this event as it should be priced in already after recent speech from RBA Governor Stevens. More details here Review On RBA Meeting (August): End Of The Easing Cycle.
EUR/USD Mid-Day Outlook
EUR/USD continues to stay in tight range but with 1.4306 minor support intact, intraday bias remains on the upside for 61.8% projection of 1.2884 to 1.4337 from 1.3747 at 1.4645. On the downside, touching of 1.4306 minor support will turn intraday outlook neutral and bring consolidation. But retreat should be contained well above 1.4007 support and bring rally resumption.
In the bigger picture, as noted before, medium term rise from 1.2456 is still in progress and has already made a new high above 1.4337 as expected. But after all, there is no change in the view that it's the third leg of consolidation pattern that started at 1.2329. Also, note that the five wave structure indicates that it's the last leg of such consolidation. Having said that, upside should be limited by cluster resistance at 1.4622/45 (61.8% retracement of 1.6039 to 1.2329 at 1.4622 and 61.8% projection of 1.2884 to 1.4337 from 1.3747 at 1.4645) to conclude the whole consolidation. On the downside, below 1.4007 support will now be the first signal that rise from 1.2456 has completed. Sustained trading below channel support at 1.3831 will confirm and bring deep decline to 1.2329 eventually.