There was a slightly better mood for risk and risk currencies in today’s Asian session as the EUR consolidated it overnight gains.
Early data showed New Zealand retail sales surprising to the upside with a 1.3 percent q/q increase in Q2 following a 0.6 percent decline in Q1. NZD popped a quick 20 points higher versus the US Dollar in a kneejerk reaction but soon drifted back below the 0.81 level. Vehicle sales accounted for much of the increase in volumes, but core sales did also manage a 0.9 percent increase over the quarter. Whilst the data is a welcome positive in the recent doom and gloom environment, it is not expected to significantly alter the RBNZ’s current stance of relatively easier money.
In other data, Australia’s business conditions and confidence readings gave differing outlooks. Business conditions deteriorated to -3 from -1 as one-off government handouts in the May-June period petered out. The index’s measure of sales fell 6 points to -3 and that of profitability to -7 but on a positive note the employment index gained 3points to -1. In contrast, business confidence rose to +4 from -3, close to its 4.1 near-term peak seen last April. The delayed impact of the RBA’s recent rate cuts, and hopes for more to come, helped sentiment to improve.
The minutes of the Bank of Japan’s July 11-12 meeting showed a few members reiterating that the Bank should be ready to take appropriate action without ruling out any options in advance. The same members raised the possibility that Japan’s economy could be adversely affected if the large risks stemming from Europe’s debt problems materialized. There was also mention of the level of the JPY with one member saying that vigilance was necessary on the risk of the JPY’s rise and stock market falls hurting the economy.
The EUR witnessed renewed short-covering overnight following marginally better than forecast Greek GDP data for Q2 (-6.2 percent y/y vs. -6.5 percent expected) that triggered a stop-hunt higher, but we still failed to overcome the 1.2440 recent high versus the US Dollar. GBP was dragged along with, it also buoyed by recent M&A talk, while the AUD went in the opposite direction after the RBA commented overnight on AUD strength and its impact on the economy.
There were no data releases in the North American session, so currencies drifted with the US dollar maintaining a slight heavy bias. Wall St struggled to maintain its upward momentum into a seventh day with a mixed result – DJIA down 0.29 percent, S&P down 0.13 percent but the Nasdaq rose 0.05 percent.
Data Highlights
NZ Q2 Retail Sales Ex-inflation out at +1.3% q/q vs. 0.7% expected and -0.6% prior
UK Jul. RICS House Price Balance out at -24% vs. -23% expected and -22% prior
JP Jun. Tertiary Industry Index out at +0.1% m/m vs. -0.3% expected and revised 0.9% prior
AU Jul. New Vehicle Sales out at -0.8% m/m, +5.0% y/y vs. revised -1.0%/+18.1% prior resp.
AU Jul. NAB Business Conditions out at -3 vs. -1 prior
AU Jul. NAB Business Confidence out at +4 vs. -3 prior
NZ Jul. Non-resident Bond Holdings out at 62.8% vs. 62.0% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
GE Q2 GDP (0600)
Swiss PPI (0715)
Sweden Industrial Production/Orders (0730)
UK ONS House Prices (0830)
UK CPI/RPI (0830)
GE ZEW Surveys (0900)
EU Euro-zone Q2 GDP (0900)
EU Euro-zone Industrial Production (0900)
EU ZEW Survey (0900)
US NFIB Small Business Optimism (1130)
US PPI (1230)
US Advance Retail Sales (1230)
US IBD/TIPP Economic Optimism (1400)
US Business Inventories (1400)
Andrew Robinson,
SAXO BANK