EURUSD Retraces Despite Improving ZEW

RBA minutes hint cut; UK CPI cools; German and Eurozone ZEW improves; Spanish auction. Current account deficit and TIC data are next.

The greenback trades higher against most majors but is little changed against GBP and JPY. European equities are losing slightly over 1%.

AUDUSD has been under pressure since yesterday. The minutes from the latest RBA meeting showed that there is a scope for a rate cut if growth outlook worsens. The RBA also noted that the AUD is somewhat overvalued. AUDUSD has declined to 1.0416.

UK consumer inflation was in line with expectations at 2.5% in August from previous 2.6% y/y. Core inflation slowed to 2.1% from 2.3%. EURGBP that declined to 0.8034 supports GBPUSD around 1.6240.

German ZEW economic sentiment improved to -18.2 in September from -25.5 in August. This is the first increase after four months of declines. Somewhat surprisingly, the ESM ruling had no impact on the index. The same index for the whole Eurozone improved to -3.8 from -21.2. EURUSD trades around 1.3046

Spain reached a full take up as it sold 12 and 18 month bills totaling EUR 4.576 bln vs. 4.5 bln target. The average yields declined and cover was mixed. Spain is still considering all the conditions tied to the financial aid but mid-October seems likely for the official request. 10 year yield is slightly lower around 5.94%.

The US session begins at 8:30 am ET with current account deficit that is expected to narrow in Q2 to USD 126.6 bln from previous deficit USD 137.3 bln followed by net long term TIC flows that are seen higher in July at USD 37.3 bln from June's USD 9.3 bln.

NY FED president and FOMC member William Dudley delivers two speeches on the economy today one at 11:30 am and the other at 4:30 pm. From a market reaction perspective, Richmond FED president and FOMC member Jeffrey Lacker's speech in New York at 7:45 pm on monetary policy is likely to have higher impact.