Intraday Market Thoughts

Aussie Hits Highest Since May 1 as Optimism Reigns

by Adam Button
Jul 18, 2012 22:29

US traders continue to favor risk trades in the FX market despite continued signs of economic weakness. The Australian dollar was the top performer while the euro lagged. The upcoming session features second-tier data on the Japanese all-industry index. Today's Premium Insights include EURUSD, Oil, Gold, and more.

Bernanke continue to stress downside risks to the economy and the Beige Book showed a loss of momentum but optimism reigned in US trading. The euro recovered the losses in European trading and the Australian dollar rallied to a six-week high.

The second day of Bernankes testimony was uneventful but he offered a skeptical outlook for Europe, saying the continent is not close to long-term solution to the crisis. He predicted volatility will continue until leaders there settle the issue.

The Beige Book showed growth slowing in many regions and lower retail sales and manufacturing pointed to a soft patch ahead.

None of it mattered as the market bid up risk trades and carry trades. Oil climbed to a six-week high and the S&P 500 gained 0.7% to 1373. One positive signal came from housing where new starts climbed to the highest since October 2008.

Ashraf points to speculation about Chinese stimulus and coordinated global intervention as risks.

The calendar is relatively light in Asia. At 0130 GMT, NAB reports on second quarter Australian business confidence. The previous reading was -1.

At 0430 GMT, its the Japanese all-industry index for May. The lagged data is expected down 0.3%. Another report will be at 0530 GMT with Japanese department store sales for June. The previous reading was -1.0%.

Overall, data will not be a large driver but headlines about USD/JPY could be a risk, given the fall below 79.00 in US trading.

Today's Premium Insights include ideas on USDCAD, with new trades on EURUSD, EURJPY, AUDUSD, gold, silver and oil. Click here for direct access: Non Subscribers click here:



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