After starting the session on the back foot, the Aussie dollar has regained composure over the course of local trade with price action making a break to the upside of 105 US cents. Solid local GDP data earlier today gave the Aussie a boost with the local unit rising 30 pips in the ensuing period. Gross domestic product recorded 1.2 percent growth in the second quarter to beat estimates of 1 percent growth. A positive revision to a first quarter decline also provided a solid footing for the local unit. Strength from regional markets and a speech from RBA Governor Glenn Stevens which showed no indication the RBA have an easing bias have also been supportive factor. The local unit is currently peaking at intra-day highs of 106.06 US cents.
As anticipated yesterday saw the RBA keep benchmark interest rates unchanged at 4.75 percent. The statement shows a decidedly reactive central bank with global economic concerns and local inflation risks rating equal importance. On inflation the statement pointed out the board remains concerned about the underlying measure of inflation, but also questioned if softer economic growth both locally and abroad will act to contain inflationary pressures. According to Governor Stevens, Prices for key Australian commodities have remained very high thus far, with growth in China continuing to look solid. Nevertheless, the board considered a decline in credit growth, housing prices and a strong Aussie dollar to indicate tighter financial conditions than normal.
The big news of the last 24-hours came out of Switzerland with the Swiss National Bank setting lowermost limit on the EURCHF pair of 1.20 centimes in an effort to stem the debilitating economic effects of a strong currency. The period to follow saw an absolute explosion across major counterparts with the franc losing over 8 percent against the Euro. It's clear the SNB mean business and at this point it doesn't appear market participants are willing to test their resolve. At the time of writing the EURCHF pair remans perched above the 1.20 floor around the 1.2040 levels.
Tonight will see all eyes on the Euro-zones largest economy, Germany, with the Federal Constitutional court due to deliver a ruling to determine if Berlin has breached German law by participating in the bailouts of Greece, Ireland and Portugal. Other economic releases tonight include UK industrial production, the fed's beige book and the Bank of Canada rates decision.