The Aussie dollar has kicked off the week in solid form with price action making a break to the upside of 104 US cents. Value spotters on Friday have also been rewarded this morning with significant strength against major counterparts headed up by the AUDCHF pair which has gained over 2 percent on the day. True to recent form were hearing noise regarding central bank intervention from both the Swiss National Bank and the Bank of Japan. Reports that Swiss authorities may be working to establish a floor for EURCHF price action or even make steps to establish a Euro-Swiss peg has seen broad based franc loses against major counterparts. There's also an air of optimism re-entering the market with solid gains across local and Asian equity markets after last week's exhausting bout of extreme volatility.
After one of the tumultuous weeks on record, global markets managed to regain some form of composure on Friday. US equities squeezed out mild gains with the broad S&P500 index closing up 0.5 percent on the day to represent a weekly loss of 2 percent. European markets also closed the week on a high note with a little help from a ban on short selling of selected financial stocks in Spain, Italy, Belgium and France. The local unit's movements over the week we're equally impressive falling to lows of 99.28 US cents before recovering to finish the week down a milder 1 percent at 103.46 US cents.
Over to the US, and the week ahead is littered with economic data with July's consumer price index data the likely focal point from a macro perspective. Headline inflation is expected to have moderated to an annual rate of 3.3 percent in July from a previous 3.6 percent. However, underlying inflation which takes out the food and energy components is expected to rise to 1.7 percent from 1.6 percent in annual terms. Housing starts, building permits and industrial production will closely watch early in the week with Philadelphia Fed index and existing home sales on the bill later in the week.
The local week ahead will see the focus turn to the release of the minutes for the RBA's policy meeting held earlier this month. Despite concerns about the medium-term outlook for inflation, the ensuing statement showed the central bank considered it "prudent" to keep rates on hold at 4.75 percent citing an "acute sense of uncertainty in global financial markets". New motor vehicle sales will kick off a fairly light week from an economic data today with the Westpac leading index and wages data later in the week. At the time of writing the Aussie dollar is buying 104 US cents.