It was a strong session for the New Zealand and Australian dollars, as the US dollar also held to gains and risk sentiment was positive after a significant rally on Wall Street overnight.
The aussie climbed to as high as 0.7167 as the RBA’s Debelle did not sound worried about recent developments in China and played down the importance of the yuan depreciation. The kiwi also rose after rising prices at a global dairy auction. The kiwi climbed to as high as 0.6367 versus the US dollar. Positive risk sentiment also helped both currencies to climb higher.
The euro was hit as it dropped to as low as 1.1263, following comments by the ECB Vice-President Vitor Constancio, who sounded downbeat about the Eurozone’s economic outlook and repeated that Quantitative Easing could be increased if necessary.
The US dollar has traded higher in the past 24 hours against other majors such as the euro, the yen and the pound, after economic data the previous day showed US consumers in relatively healthy condition with respect to their purchases. Advance retail sales for August slightly missed expectations, but the previous month’s estimate was revised upwards. Furthermore, the miss had more to do with weaker gasoline prices rather than a smaller volume of purchases. Other US data such as Empire State manufacturing index and industrial production came in on the weak side but appeared to have little effect.
Looking ahead, today will see the release of some important data that could move the markets ahead of tomorrow’s Fed decision. Firstly, UK unemployment is expected to have held constant at 5.6% in July. This will be followed by final Eurozone inflation for August – expected to be confirmed at just 0.2% year-on-year. Later during the European session, US inflation for August will be the last important economic release the Fed will consider as it starts its 2-day meeting in Washington. As a coincidence the US is expected to have had the same inflation as the Eurozone in August at 0.2% year-on-year; showing the absence of headline inflation pressures in the world’s two largest economies.