Market Movers of the Day
Asia – Pacific
*Australian Retail Sales dropped 1.0% in July
*Australian Home Loan Approvals fell 2.0% in July
*Australian Consumer Confidence gained 5.2% (Sep)
*Japan’s Leading Economic Index climbed to 83.0 in July
*New Zealand’s central bank left its benchmark interest rate unchanged at 2.5%
*New Zealand’s Terms of Trade Index dropped 9.0% (2Q)
Europe
*German Consumer Price Index fell 0.1% in July on an annualized basis
*UK Trade Balance in July worse than expected at -₤6.5B
*UK Total Trade Balance, worse expected -₤2.4B
*UK NIESR GDP Estimate increased 0.2% (Aug)
Americas
*Canadian Housing Starts in August better than expected at 150.4K on an annualized basis
*US Fed’s Beige Book
The Overall Sentiment
US stock markets ended on the positive side and the Dollar continued to weaken as the Fed’s Beige Book business survey indicated that most regions of the country show signs of stabilization or improvement. The Canadian dollar advanced as Canada’s Housing Starts in August came better than expected but ended little changed as the market awaits the BoC’s meeting and interest rate decision. The Pound weakened against the Euro as UK’s Trade Balance showed a widened deficit for a second month adding signs that the recession hasn’t ended for the British economy. In the Asia-Pacific region New Zealand’s central bank kept its benchmark interest rate unchanged and the New Zealand dollar’s rally of the past days lost some strength as New Zealand’s Terms of Trade Index fell to its lowest levels in almost three years. The Australian dollar dropped as Retail Sales disappointed with an unexpected decline and Home Loan Approvals surprised for the worst overshadowing the positive Consumer Confidence data. The Yen continued to strengthen as Japan’s Leading Economic Index climbed in July more than forecasted.
The Day Ahead
The day will start in Australia with the Melbourne Inflation Expectation presenting the consumer expectations of future inflation during the next 12 months and Australia’s Employment Change for August which is followed by traders as it has an impact on consumer spending, labor conditions, and overall economic activity. In the UK the Bank of England will announce its monetary policy decision where a large market consensus points to the benchmark interest rate remaining unchanged at 0.5% and no modifications in the BoE’s asset-purchase program. Nevertheless, the bank can always surprise as it did in its last meeting by unexpectedly increasing its Quantitative Easing program. It will be a big day for the Canadian dollar with the release of Canada’s International Merchandise Trade figures and the Bank of Canada’s interest rate decision where market estimations point to an unchanged rate of 0.25%. In the US Initial Jobless Claims are expected to fall as an additional sign that the US economy is improving. Some volatility for the Yen is likely at the end of the day with the release of Japan’s GDP figures.
Technical Analysis
AUD/JPY DAILY
AUD/JPY has traded in range for the last three weeks developing a channel with supports at 76.50 and an upper boundary just below 80. With an additional day where it failed to break above 80 and a lower closing than a day before the cross is confirming the opportunity to enter a Short position that we indicated a couple of days ago. Stop Loss should be set above 80 and entering a Long position should be considered if that resistance is breached.
Market Analysis provided by eToro
Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.
