FOREX: Asia FX Wrap - USD Holds Above Support Heading Into US CPI
The BBDXY has had a range of 1200.24 - 1201.45 in the Asia-Pac session, it is currently trading around 1201, +0.05%. The USD is consolidating around the 1200 area. The market will be focused on the US inflation data tonight looking for the green light to test the lows again. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows towards 1180 where demand should return initially. A break sub 1180 would be extremely bearish, should the USD start another leg lower it would have big implications for FX and potentially see a lot of the recent ranges in G10 broken.
- EUR/USD - Asian range 1.1693 - 1.1707, Asia is currently trading 1.1700. The pair’s momentum higher stalled towards the 1.1800 area and then turned back lower. EUR is still within its wider 1.1350-1.1850 range with a bias to the topside.
- GBP/USD - Asian range 1.3523 - 1.3540, Asia is currently dealing around 1.3525. The pair failed back towards 1.3600 and is back in the middle of its recent 1.3350-1.3650 range.
- USD/CNH - Asian range 7.1144 - 7.1211, the USD/CNY fix printed 7.1034, Asia is currently dealing around 7.1200. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
- Cross asset : SPX +0.01%, Gold $3632, US 10-Year 4.05%, BBDXY 1201, Crude Oil $63.53
- Data/Events : EZ ECB Deposit Facility Rate, Germany Current Account Balance
Fig 1: BBDXY Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUD: Asia Wrap - AUD Dips In Reaction To Cut, Focus Turns To Press Conference
The AUD/USD has had a range of 0.6500 - 0.6526 in the Asia- Pac session, it is currently trading around 0.6510, -0.05%. Risk has traded a little higher in our session, E-minis +15%, NQU5 +0.15%. The AUD/USD has moved a couple of spreads lower in reaction to the RBA cutting rates by 25bps. Focus will now turn to the press conference, then the US CPI tonight.
- “ RBA Says: Will Be Attentive to Data, Evolving Assessment of Risks, Sees Risk Households, Firms Delay Spending, Policy Well Placed to Respond Decisively to Global Factors, Forecasts Assume Trade Concerns Weigh on Aust. Inflation, Trade Policy Expected to Have Adverse Effect on Global Eco.” - BBG
- "Australian Consumer Confidence Dn 1.3 Pts Last Week - ANZ Roy Morgan" - DJ
- AUSTRALIA DATA: Business Outlook May Have Turned. NAB’s measure of business confidence can be volatile but it has been trending higher since April and printed at 7 in July up from 5 in June and -2 in March signalling an improvement in how firms see the outlook. Business conditions moderated to 5, but are still above every month this year except June, which was revised down 2 points to 7. The activity components moderated in July but generally remained at levels above May.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6565(AUD908m). Upcoming Close Strikes : 0.6575(AUD646m Aug 13), 0.6600(AUD1.25b Aug 14) - BBG
- CFTC Data shows Asset managers added to their shorts -60729(Last -49183), the Leveraged community added very slightly to their own shorts -13997(Last -13823).
- AUD/JPY - Asia-Pac range 96.37 - 96.83, Asia is trading around 96.60. The pair has bounced nicely and is testing its first resistance around the 96.50 area. There should be sellers around here initially, a sustained break below 94.50/95.00 is needed to signal a deeper move lower or a break above 97.50 would reinstate the momentum higher.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
RBA SEES CORE INFLATION AT 2.5% MIDPOINT BY END 2027
- RBA SEES CORE INFLATION AT 2.5% MIDPOINT BY END 2027
RBA SAYS DECISION TO CUT "UNANIMOUS"
- RBA SAYS DECISION TO CUT "UNANIMOUS"
