FX Highlights

  • USD is trading mixed with AUD rallying to a 11 month high supported by positive comments from RBA Governor Stevens fueling RBA rate hike speculation, AUD gains were capped by a sharp decline in the Shanghai index sparked by a report in the China Daily that China has banned expansion of steel production, EUR mixed despite report of a bigger than expected drop in EU inflation, global economic recovery hopes limit USD gains and supports European equities, the main driver for the FX market is risk versus safety
  • Focus turns to today's release of US CPI, industrial production, capacity utilization and Michigan consumer sentiment, Canada will release manufacturing shipments
  • Japan's June tertiary index rises 0.1%, BOJ minutes for the July 14th/15th policy meeting state that the BOJ may end its bond purchases in December if markets continue to improve, BOJ officials expressed concern about exports and deflationary pressures, JPY higher
  • AUD rallies to 11 month high supported by hawkish comments from RBA Governor Stevens who said that inflation will not fall as much as expected, global outlook better, central bank tightening to be timely and normal interest rate would be well above the current rate of 3%, AUD higher
  • EU July inflation falls 0.7%, EUR mixed with the downside limited by Thursday's report of return to growth in Germany and France
  • LIBOR rates at new lows
  • US equity markets set to open lower, European equities 0.5% higher, Nikkei closed 88 points higher

Upcoming Events

  • US- Friday, July CPI will be released expected at 0.1% compared to 0.7% last month along with July industrial production expected flat compared to -0.4% last month, capacity expected at 68.3% utilization and August consumer sentiment expected to rise to 68 from 66 in July
  • CAN- Friday, June manufacturing shipments will be released expected at 0.5% compared to -6% last month