After months of improved manufacturing PMIs, US industrial production beat estimates. But it didn't provide a lift to the US dollar, which was the laggard on the day, allowing the euro to climb near 1.11. Australian wage data is due next.
Industrial production rose 1.0% in April, beating the 0.4% consensus estimate. Manufacturing production and capacity utilization were also better than forecast in a sign that hard data is catching up to soft data, as the Fed expects. Housing starts and building permits fell unexpectedly.
The problem is that it's going to take much more than one report. The US Citi Economic Surprise Index is the G10 laggard and at the lowest in a year.
The dollar suffered for the second day, partly because US housing starts were soft. Technically, the break in EUR/USD above 1.10 is significant, partly helped by Eurozone GDP. That level held early in the month but was blown out Tuesday and extended as high as 1.1097, which is the best since election night in the US.
USD/JPY also fell below 113.00 in the first real retracement in a month. USD/CAD fell to the lowest since April 26 but an unexpected crude storage build in the API report early in Asia is a threat to the loonie.
The Australian dollar has climbed for five consecutive days after falling for the five days before that. The bounce has only been half as large as the drop. That could change at 0130 GMT with the release of the Q1 wage price index. It's forecast to rise 0.5% q/q and 1.9% y/y. Anything within 0.2 pp of those numbers is unlikely to cause ripples.
What could cause waves is any fresh worries from China. The Shanghai Composite has climbed for four days after a month-long swoon.