Forex trading headlines 5 August 2014
The data
- Reserve Bank of Australia leaves target cash rate unchanged at 2.50%
- RBA accompanying statement – headlines
- Not much to grab from the language in RBA Statement
- Quality named Swiss data point rises in Q2 2014
- July 2014 Spanish Markit services PMI 56.2 vs 55.2 exp
- July 2014 Italian Markit/ADACI services PMI 52.8 vs 53.8 exp
- July 2014 French Markit services PMI 50.4 vs 50.4 exp
- July 2014 German Markit services PMI 56.7 vs 56.6 exp
- July 2014 eurozone Markit services PMI final 54.2 vs 54.4 exp
- European services leave the euro a little flat but signs of a pick up are there (Rundown of the PMI’s)
- UK Markit/CIPS services PMI July 59.1 vs 57.9 exp
- June 2014 eurozone retail sales 0.4% vs 0.4% exp m/m
- Q2 2014 Portuguese unemployment falls to 13.9% vs 15.1% in Q1
The news
- ECB will discuss draft AQR results with banks in September
- Credit Agricole profits creamed over Banco Espirito Santo holdings
- Switzerland shutting the door on circumvention of sanctions
- The importance of horizontal lines and how to use them in trading
- Abe’s LDP deputy Shiozaki says Japan can’t raise wages if productivity remains low
- BOE’s Haldane says financial risks may be moving from banks to non-banks
- UK banking outlook downgraded to negative from stable by Moody’s
- Saudi Arabia the next on the list for possible ebola victims
- EU and Russia to hold bilateral gas talks this month
The morning kicked off with the RBA standing pat as expected. “Steady as she goes” was the sentiment and neutral on rates is the theme. Nothing in the statement changed an awful lot and the whole event was worth around 26 pips top to bottom in AUD/USD from 0.9317 to 0.9343. We tried to hold the little gains we had but late broad USD buying tipped the scales and we trade near the lows at 0.9320
EUR/USD was sitting pretty at 1.3420 as we strode into the services PMI’s. Spain set an early expectant tone with a jump in their number but Italy managed to pull the rug of that positivity by posting a 1 point loss. The rest came out slightly above or below expectations. As is always the key with data we must look at the trend. By and large the numbers posted decent gains on June and France will be more than buoyed that the sector has returned to expansion. The market had other ideas though and the fall to 1.3406 after the Italian number didn’t come close to looking like reversing.
So on we moved to retail sales and we knew that the European consumer isn’t in the best of spirits right now. So you would have thought the euro would have screamed higher when retail sales hit a seven year high year on year? Not so though and a mixture of some broad dollar buying, and better UK services PMI taking a paddle to EUR/GBP, was enough to keep the pressure on and knock the currency through 1.3400. Support at 1.3380/85 has been under pressure but is holding at time of writing.
USD/JPY did its 10 pip range thing early in the day but has come off the lows again at 102.40/45 to take a run at old resistance at 102.70. 102.73 the high so far and there maybe more than one eye on the 103.00 level yet again.
GBP/USD had continued yesterdays slow grind higher from the low 1.68’s up to the heady heights of 1.6873. We came off the boil slightly as we followed the euro down through its PMI’s and 1.6845 was the bottom when the services PMI hit. We whoopped the forecast and last months number to show that a second half slowdown may not be as bad as some feared and we put in a run towards 1.6900. It didn’t last long and 1.6889 was the high. Moody’s cutting the UK banking sector to negative from stable and the aforementioned dollar strength dragged us back to right where we started the day and that’s where we head into the US session at 1.6865
