Dollar softens amid greater risk appetite

Dollar slides for a third straight day

The value of the US dollar, as measured by a basket of six major currencies fell for a third consecutive day as risk appetite gained an additional foothold. Building on yesterday’s news that US and China were planning to sit down for trade negotiations later this month, action by the People’s Bank of China to strengthen the yuan at the fix for the first time in seven days, helped cement the better mood.

The move lent mild support to most beta-risk currencies with AUD/USD rising 0.1%, USD/JPY dipping 0.14% and USD/SGD sliding 0.06%. Equity market did not benefit as much with most struggled to extend the positive close on Wall Street. The Japan225 index fell 0.11%, the HongKong33 CFD is down 0.39% and ChinaA50 shares slid 1.7%.

US warns Turkey of more sanctions

Despite the warning from the US that Turkey can expect more sanctions if it does not hand over the detained American pastor quickly, USD/TRY has declined for a fourth straight day, sliding 0.27% to 5.7970, adding to the 16.6% fall over the last three days. The currency issues have taken their toll on local consumer confidence, with the index slipping to 68.3 in August, its lowest reading since December.

Turkish Lira erases its economic attack losses

RBA’s Lowe reiterates low Aussie rates here to stay

In a speech before the House of Representatives Standing Committee on Economics, RBA Governor Lowe said the domestic economy was moving in the right direction, though reiterated there is not a strong case for any near-term adjustment in policy and would likely keep the current policy in place until benchmarks for unemployment and inflation are closer. He expects the next move in interest rates to be upwards with only a minute chance of a rate cut, only if there is a “China shock” or if there is a domestic housing market collapse.

On the Australian dollar, he expressed the opinion that a lower Aussie would be beneficial, helping to boost inflation and stimulate growth. The Aussie showed little reaction to the comments, instead posting gains after China announced a higher fix for the yuan versus the US dollar. AUD/USD is now up 0.29% at 0.7268.

European and Canadian CPI the main events on the calendar

Today’s European calendar is filled with Euro-zone data. The June current account balance sets things going, and is expected to show the surplus widening to 23.2 billion Euros from 22.4 billion. This is followed by consumer price readings for July. Prices are seen rising at the same pace as June on an annual basis, but seen slipping 0.3% month-on-month. A reading above these estimates could put upward pressure on the Euro. The Americas session is more Canada-centric, with both national CPI data and the Bank of Canada’s core CPI readings on tap. The US’ Michigan sentiment index is seen ticking higher to 98.0 in August from 97.9 the previous month.

Canadian dollar trading sideways as manufacturing sales within expectations

The full MarketPulse data calendar can be viewed here:

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Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.