Leading index rebounds
The Westpac leading index showed some improvement in July, rising 0.1% m/m after a 0.08% decline in June. This was the first positive reading since March and in comments linked to the release, Westpac stated that this was the first above-trend reading since November. Westpac noted that the changes in the share market, commodity prices and the inversion of the yield curve point to a likely softer reading for August. The bank still expects the next RBA cut to come in October.
AUD/USD was marginally higher during the Asian morning, partly from the data but also reflecting better risk appetite across asset classes. The pair is lining up for a second daily gain for the first time since early-July. US indices moved higher by between 0.32% and 0.44% while USD/JPY traded 0.24% higher at 106.48.
AUD/USD Daily Chart
Pound holds steady
The pound is clinging on to yesterday’s gains which saw GBP/USD hit the highest level in almost two weeks. The pound rallied yesterday following some apparent soothing words from German Chancellor Angela Merkel who said “we’ll think about practical solutions” when referring to the Irish backstop situation. That seems to be a softening of the previous stance and FX markets took it positively.
GBP/USD Daily Chart
Fed minutes awaited
The data calendar is quite sparse during the European session while the North American day features the minutes of the last Fed meeting as the main event. No doubt these minutes will be overshadowed by Powell’s speech at Jackson Hole on Friday, with markets hoping for more clarity of the future Fed path. Speculation seems to favour the announcement of a full-blown easing cycle, but recent Fed comments, and the economic data, could suggest disappointment to the majority.
Aside from the minutes, we have US existing home sales for July, which probably rose 2.5% m/m according to the latest survey, and Canada’s consumer prices for July, which are expected to ease to +1.7% y/y from +2.0% in June.
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at firstname.lastname@example.org. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.