Aussie and Kiwi Sink, While Dollar Boost from ADP Data Short Lived

Daily Forex Fundamentals | Written by CMS Forex | Jul 30 08 22:42 GMT |

JPN Industrial Production Falls 2% in June Preliminary data showed that Japan's industrial production declined 2% in June compared to May. It was slightly worse than the pace expected by a consensus of economists. Japan's main trading partners are all showing slowing growth and therefore weaker demand, as companies around the world face higher credit costs. AUS Building Approvals Dissapoint Expectations, Decline 0.7% Meanwhile, Australian building approvals fell 0.7% in June, undershooting forecasts of a 1% increase. On an annual basis approvals are down 7.8%. AUD/JPY - Aussie Slides vs Yen Following Its Housing Release The Aussie-Yen pair sank 100 pips from its session open near 103 to trade near the 102 level. The building approvals data had a clear impact around its release, and the Aussie continued falling overnight and into NY trading. NZD/USD - Kiwi Falls on RBNZ Governor Bollard Comments The New Zealand Dollar is also on the defensive these days as expectations for more interest rate cuts from the Reserve Bank increase. The bank's Governor Alan Bollard said borrowing costs "have room to fall" in a n earlier meeting. The Kiwi-US Dollar pair is down about 120 pips from its yesterday's intra-day high. EUR Economic Sentiment Plunges and Consumer Confidence Continues its Decline European economic sentiment fell 5.3 points to 89.5 in July, the sharpest decline since the month after the Sept. 11th terrorist attacks. The consumer confidence portion of the index declined to -20, as consumers face the highest inflation in 16 years. EUR Business Climate Index Falls, So Does Retail Activity Soaring energy costs, the Euro's climb against the Dollar, and the credit crunch are working to pressure Euro-zone business activity. The business climate indicator fell to negative 0.21 with orders and expectations for industrial goods falling. In a separate release, the Bloomberg Retail PMI stood at 46.0, another month of contraction as the figure is below the 50 boom-bust level. SWZ KOF Leading Index Falls to 0.90 In Switzerland, the leading index fell to 0.90, more than expected by economists. This puts the index, which tries to predict activity in 6 months time, at a 5 year low. EUR/CHF - European Stock Gains Propel Euro Higher vs Swiss Franc European stocks gained overnight, which boosted the Euro-Swiss Franc. The pair's overnight rally stalled following the European releases but continued to climb afterwards. The 1.63 level was important resistance last week and yesterday, and the pair managed to stay above it after a slide to begin the global session. US ADP Shows Surprising Gain of 9K Jobs in July In the US, the ADP measure of employment for July was an increase 9K, handily beating the expected decline of 55K. It was welcoming news to Dollar bulls who used the data to bid up stocks and the US Dollar during the NY open. Still, the number is not impressive in its own right and shows that the labor market in the US remains weak. USD/JPY - Dollar Boosted by Jobs Report, But Weakens in Afternoon Trading The Dollar-Yen pair fell overnight after yesterday's sharp rally to trade near 107.80 prior to the NY open. The Dollar got a boost following the better than expected jobs report, but the level around 108.25 proved to be an important point of resistance. With stocks giving up some of their earlier gains, and oil prices climbing in early afternoon trading, the Dollar pared its gains and was below its open for the session by 2 PM. CAN Producer Prices Increase More Than Expected In Canada, producer prices rose 1.3% in June, more than expected, and May's figure was revised up as well. Higher prices for oil and coal products, up 6.1% in June, were the main contributors to the increase in prices at factory gates. The Raw Materials Price Index continued its upward trend, climbing 4.4% in June, up from its 3.1% rise in May. AUD/CAD - Loonie Gains on Aussie Following Data in Both Countries In a battle of two currencies favored as destinations for carry trade the Australian Dollar-Canadian Dollar pair showed a sharp slide in favor of the Loonie. Australia's weaker data and the faster producer inflation from Canada made this a one-sided trade this session. Since yesterday's high near 0.98 the pair is down about 150 pips. Upcoming Releases Tonight, there will be several more releases from Australia including retail sales, trade balance and private sector credit. Japan will post its manufacturing PMI, and figures on earnings and housing starts. New Zealand reveals a survey on business confidence. Overnight, Switzerland and the Euro zone post data on consumer inflation, while Germany and the Euro-zone release their unemployment rates. Tomorrow, the US and Canada post GDP data, while the US also releases its weekly jobless claims. Capital Market Services, L.L.C. www.cmsfx.com ©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. 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