MORNING BRIEFING: Australian CPI rises less than expected, ease likeliness of RBA intervention

[RTFX-Trading]

MORNING BRIEFING: Australian CPI rises less than expected, ease likeliness of RBA intervention

What’s new:
Australia: CPI rises much less than expected
United States: Consumer Confidence falls in July
Japan: Nikkei strongest close in 2 weeks on strong corporate earnings and weaker Yen
China: IMF staff estimate the Yuan is undervalued between 5 to 27 percent, say sources
 
Today:


Rates in Asia and Indices:
EURUSD: 1.3033 - 1.2966.
USDCHF: 1.0624 - 1.0590.
GBPUSD: 1.5627- 1.5562.
EURJPY: 113.48 – 112.57.
USDJPY: 88.07 – 87.66.
DowJones: 10'537.69 +0.12%
NASDAQ: 2'288.25 -0.36%
S & P 500: 1'113.84 -0.10%
Nikkei: 9'753.27 +2.70%
Shanghai: 2'634.77 +2.31%
Gold: $ 1'162.10   
Crude Oil: $ 77.54

Comments:

The Nikkei climbed 2.7% on Wednesday for its highest close and biggest one-day gain in two weeks, breaking through several resistance levels on strong corporate as well as a weaker Yen.

Australian consumer prices rose much less than expected last quarter while core inflation slowed to its lowest in over three years, greatly lessening the possibility of the Reserve Bank of Australia raising interest rates, now at 4.5%, at its monthly meeting on August 3rd.

US consumer confidence for July fell to its lowest level since February, and eyes are on consumer durable goods numbers for June due today to further gauge the health of the world's largest economy.

The International Monetary Fund has chosen not to call the Yuan "substantially" undervalued, a move that recognizes China's efforts to free up its exchange rate and avoids friction with an increasingly influential shareholder. Since its de-pegging from the US Dollar, the Yuan has appreciated by 0.7% against the buck. Sources said IMF economists reckoned the Yuan was still between 5%and 27% undervalued depending on the methodologies used. A diplomat in Beijing confirmed the range.

The Euro is hovering above 1.3000 versus the Dollar today, however has failed to close above this technically crucial level, the 61.8% Fibonacci retracement from its fall since mid-April. Against the Yen, the single currency reached a 2-month high yesterday, while continued to record new highs today. EUR/JPY is now seen as bullish by an increasing number of traders, confirmed also by our RTFX Trend which turned bullish for the pair yesterday, with a start rate of 114.23.

The Aussie slipped to 0.8922 earlier following the release of inflation figures from an 11-week high reached yesterday at 0.9069.

Have a nice day,

Emman Xuereb
Trading Desk
RTFX Ltd
Risk Disclaimer