Thin Volumes as UK and US Observe Public Holidays

· Aussie dollar lacked direction as US and UK public holidays led to subdued volumes;
· Euro traded at three-month lows as ECB stimulus bets mount;
· Traders to focus on string of US data this evening.

The Aussie Dollar lacked direction yesterday trading within a tight range for much of the daily sessions, thin volumes attributable to US and UK public holidays. As hopes of a rate increase from the RBA have somewhat diminished over the last week, the Aussie dollar has found new support at 92 US cents, a level at which markets seem comfortable with. However, the next test for Aussie support will come from a string of US data this evening, namely US durable goods. As appetite for the greenback has heightened in recent weeks, data from this evenings sessions will be sure to confirm whether the reserve currency will remain in focus.

Any signals from the Eurozone became center stage yesterday as there was little to focus on elsewhere. As low inflation has continued to linger over the bloc, Mario Draghi has not been shy in stating his intentions to react, yesterday signalling that the ECB are ready to take action next month, speaking at an ECB conference in Portugal. Despite the ECB President’s honesty, markets are still unsure of the approach he is likely to adopt, many dismissing a pure QE approach and expecting further cuts in interest rates, or perhaps even negative rates. German unemployment data due for release tomorrow evening will be closely watched by the Central Bank.

With little data to follow of the previous 24 hours, markets await an array of US data this evening including Durable Goods, Services PMI and Consumer Confidence. Other releases have little chance of moving the markets significantly.

Tom Williams
Sales Trader