• Quiet day for the Aussie as public holiday is observed, NAB Business Confidence in focus;
• Euro falls on weak investor confidence, markets favour higher yielding assets;
• Extremely thin volumes favour US dollar as markets await direction.
As Australia observed a public holiday for the Queen’s Birthday yesterday, traders had little to go by throughout the Asian session, markets turning to a relatively encouraging Chinese Trade Balance reading over the weekend. In addition to positivity from China’s trade surplus, the People’s Bank of China reduced the amount of cash that banks must hold in reserve in an attempt to encourage lending to parts of the economy that need it most. The Aussie reached intraday highs of 0.9363 US cents to eventually succumb to broad greenback strength. This morning’s session brings the release of NAB Business Confidence data and Chinese CPI, both are likely to provide direction in the Aussie.
The Euro began the week moving moderately higher against its US counterpart but gains were short lived and lacked substance. On the approach to the London session open the Euro began to move lower, with losses mounting on the announcement of a weaker investor confidence reading from the Eurozone. It is not surprising that in the wake of recent policy changes from the ECB that investor sentiment is low as it is still unclear whether the ECB has done enough to stimulate growth throughout the bloc.
In a day of little direction, the world’s reserve currency came out on top and extended gains seen from last week’s encouraging jobs report. Markets will have to wait until Thursday evening for real direction when we can expect to see an uplift of 0.6% in retail sales data which would support claims that US growth has recovered from the first quarter. On top of this, PPI and consumer confidence will act as catalysts towards the end of the week.
[B]Tom Williams[/B]
Sales Trader