Markets Open Week In A Quiet Manner
ActionForex | Jul 21, 2014 04:16AM ET
The financial markets opened the week in rather quiet way. Asian equities struggled in tight range while Japan is on bank holiday. The Dollar is generally lower but loss is limited. The New Zealand dollar is the strongest currency today and traders pared back some short positions ahead of RBNZ rate decision later this week. Meanwhile, the forex markets is mixed elsewhere. Released today, UK Rightmove house price dropped -0.8% mom in July, down from June's 0.1% mom. German PPI was flat 0.0% mom and dropped -0.7% yoy in June. The economic calendar is empty for the rest of the day and we'd probably seen some more consolidative trading.
For the coming week, the BOE minutes due July 23 would unveil the rationale for maintaining the Bank rate at 0.5% and the size of the asset purchase program at 375B pound, despite rising inflation and pickup in economic growth. The RBNZ meeting on July 24 would likely announce another rate hike of 25 bps to 3.5%. On the dataflow, the US, Japan and Australia would release inflation data for June/2Q14. In China, the preliminary manufacturing PMI by HSBC would probably show a modest rise to 51.9 in July from 51.5 a month ago. Here are some highlights:
- Tuesday: UK public sector net borrowing; US CPI, existing home sales
- Wednesday: Australia CPI; BoE minutes; Canada retail sales
- Thursday: RBNZ rate decision; Japan trade balance, PMI manufacturing, China HSBC PMI manufacturing; Eurozone PMIs; UK retail sales; US jobless claims, new home sales
- Friday: Japan CPI; German Gfk consumer sentiment, Ifo business climate; UK GDP; US durables
Considering the fundamental events including RBNZ and AUssie CPI, some volatility could be seen in the AUD/NZD this week. But after all, the cross is still staying in the medium term consolidation pattern from 1.0489. Even in case of stronger recovery, we'd expect strong resistance below 1.1197 resistance to bring larger down trend resumption. The AUD/NZD is expected to take out key support level of 1.0432 (2005 low) at a latter stage.
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