Currency Markets Prepare For ECB & NFP

03/09/2015 15:06 AST

The big action this morning was in Australia as the currency fell to a multiyear low after retail sales missed expectations and the trade balance narrowed on lower exports. The Aussie is holding at 0.7017 falling 21 points in the Asian session. Chinese markets are closed today, so traders were a bit less stressed. Aussie retail sales declined 0.1 percent from a month earlier, when they rose a revised 0.6 percent -- lower than first reported, government data showed Thursday. The result compares with the median estimate in a Bloomberg survey of 26 economists for a 0.4 percent gain. None predicted a drop.

The data corresponds with a rise in the household savings rate and suggests little improvement in the economy at the start of the third quarter after growth slowed to an anemic 0.2 percent in the prior period. Today’s result could also be a consequence of stronger June sales, when businesses brought forward spending to take advantage of write-offs announced in the government’s May budget encouraging small firms to buy equipment.

Government data showed Australia’s expansion eased last quarter as a slowdown in key trading partner China weighed on exports. A separate report today indicated better overseas shipments, which rose 2 percent in July and the trade deficit narrowed to $1.73 billion from a revised A$3.05 billion in June.

The kiwi was able to gain a bit of momentum against the stronger US dollar. The greenback gained to 96.02 adding 13 points. The NZD is trading at 0.6355 adding 5 points. Chinese equity markets, which have been volatile, are closed for the remainder of the week as part of public commemorations for the 70th anniversary of the end of World War Two, which may help dampen market volatility, ANZ said.

Japanese yen eased as traders were less stressed. The yen eased against the dollar and the euro. The USDJPY added 32 points 120.65 and at 135.31 up by 21 points against the euro. The euro fell versus the dollar ahead of the European Central Bank’s monetary policy meeting on Thursday, with eyes on what ECB President Mario Draghi will say at a post-meeting press conference, amid speculation about possible additional monetary easing later this year, dealers said.

FX Empire