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JPY

Currency Markets Brace for Event Risk-Laden Week

Currency traders are on edge ahead of a series of event risks that could trigger renewed volatility in foreign exchange markets. The dollar is inching lower after last week brought confirmation of a weakening in retail sales, along with an unexpected increase in jobless claims during the June non-farm payrolls survey period. Recent data has shown clear evidence of slowing momentum in the US economy, but the greenback has continued to win the “cleanest dirty shirt” contest, emerging largely unscathed as other major currencies have come under selling pressure. Friday’s ‘triple witching’ session left the major equity indices unharmed, but...

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Inflation & politics this weeks focus

• Macro trends. Weaker EZ PMIs weighed on EUR. Positive US surprises also helped the USD. AUD drifted lower, but still rose over the week.• AUD crosses. Diverging trends still AUD supportive, particularly on crosses. AUD/EUR & AUD/CAD near respective 1-year highs. AUD/JPY north of 106.• Event radar. Locally, monthly CPI (Weds) & speech by the RBA Dep. Gov in focus. US PCE deflator due (Fri) & first Presidential Election debate will be held. Diverging business PMI data from Europe and the US generated a few intra-session market gyrations on Friday. The US data defied gravity with the PMIs improving...

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AUD cross-currents

• Mixed markets. European equities rose, while US stocks slipped back. Dovish European central bank outcomes weighed on EUR & GBP. USD a bit firmer.• Central banks. SNB cut rates again. The BoE opened the door to a move in August. The cross-currents pushed AUD/EUR & AUD/GBP higher.• Data flow. PMIs in focus today with data from Europe & the US due. Is the US’ outperformance fading? If so, the USD may lose ground. There were several pieces of global economic news overnight, yet for the most part the net financial market moves were modest. Equities across Europe rose again...

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AUD outperformance continues

• Quiet trade. A public holiday in the US. European equities a bit lower. UK yields a touch higher after UK services inflation surprised. USD consolidates.• AUD trends. The AUD’s post RBA grind higher extended. AUD/EUR touched a 1-year high, AUD/JPY at levels last traded in 2013.• Global data. Q1 NZ GDP shows economy emerged from ‘technical recession’. Bank of England meeting tonight. With the US away on a mid-week public holiday markets were quiet overnight. US equity and bond markets were closed. In Europe, equities gave back a little ground (EuroStoxx50 -0.6%), although the UK FTSE100 moved in the...

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Hawkish RBA vibes support the AUD

• Upbeat tone. Negative US economic news was good news for markets. Softer US retail sales weighed on bond yields which in turn boosted risk assets.• RBA meeting. No change in rates but the RBA’s tone was more ‘hawkish’. Inflation risks remain. We think RBA cuts still look some time away.• AUD outperformance. The backdrop has supported the AUD. AUD/EUR is at a multi-month high, while AUD/JPY is at levels last traded in 2013. The positive vibes continued overnight. Easing concerns about the upcoming French parliamentary elections was compounded by softer US retail sales. The underwhelming US economic news was...

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