Traders saw a good deal of data in the Asian session including Japanese Industrial Production which missed its target along with a drop in New Zealand business confidence. Asian markets are trading on a positive note today on the back of an improvement over last month for industrial production data from Japanese economy along with speculation that violence in Iraq will not curb the output of Organization of the Petroleum Exporting Countries.
The US dollar continues to be a drag, trading at 80.09 to start off the week. The US Dollar Index (US Dollar Index) traded on a negative note and declined around 0.4 percent at the end of last week on the back of rise in risk appetite in market sentiments in early part of the trade which led to decline in demand for the low yielding currency. Further, a drop in economic growth of the US exerted downside pressure on the currency. However, favorable economic sentiments and home sales data from the country cushioned sharp fall in the DX. The currency touched a weekly low of 80.06 and closed at 80.09 on Friday.
US Revised UoM Consumer Sentiment increased by 1.3 points to 82.5-mark in June as against a rise of 81.2-level in May. Revised UoM Inflation Expectations rose by 3.1 percent in current month from 3 percent in May.
The markets will focus this week on European inflation data, along with the decision of the Reserve Bank of Australia and the ECB meeting on Thursday. The big event will be the US nonfarm payroll report printing a day earlier due to the 4th of July holiday in the US.
The euro is in the red on Monday morning trading at 1.3643 after benefitting last week from the weakness in the US dollar. The shared currency appreciated by 0.25 percent on Friday’s trading session on the back of weakness in DX as the US GDP contracted sharply. Further, positive economic data from Euro Zone and rise in risk appetite in the domestic markets supported currency to gain strength. However, geopolitical tensions in Iraq and ongoing conflicts between Russia and Ukraine kept currency under pressure.
The pound is down slightly this morning at 1.7029 as traders booked a bit of profits. Over the weekend, retiring Deputy Governor of the Bank of England, Bean said that he expects interest rates to rise sooner than later. Charlie Bean said on Sunday the bank could begin to unwind its quantitative easing programme of bond purchases once interest rates start to rise.
“I think it will be natural either at the time the MPC (Monetary Policy Committee) raises bank rates, or sometime shortly thereafter to say ‘Ok, we won’t reinvest maturing gilts’,” Bean, a deputy governor who leaves the bank at the end of June, told Sky television in an interview.
A quick round up of Asian currencies shows the JPY gaining momentum once again against the greenback and the euro trading at 101.32 and 138.23 respectively. While the kiwi and the Aussie declined in this morning’s session. The kiwi is at 0.8753 giving up 25 points while the AUD is at 0.9420 down by 3 points.