Author : Brett Gordon
The Asia Pacific currencies were hit hard last week with U.S. economic data and central bank activity driving the price action. There were no major economic reports in Australia and New Zealand, however, the U.S. government released surprisingly strong reports on Durable Goods and Advance GDP.
The Australian Dollar was pressured by a combination of stronger-than-expected U.S. Durable Goods and GDP data. Traders also cut long positions as the financial markets reduced the chances of an aggressive 50-basis point rate cut by the Fed. However, the heavy selling pressure was sparked by dovish comments from Reserve Bank of Australia Governor Philip Lowe.
Lowe said last week the central bank could keep cutting the cash rate in the coming months to support the limping economy. After back to back rate cuts in June and July drove the RBA’s benchmark rate to an unprecedented 1%, Lowe said in Sydney on July 25 that borrowing costs were likely to remain low for some time.
Busy week ahead with key stats which include German consumer sentiment, retail sales, and employment numbers due out on Tuesday and Wednesday. Following last week’s ECB press conference, the Eurozone’s unemployment and retail sales figures due out on Wednesday and Friday will be significant. Barring material deviation from prelims, however, French and German manufacturing PMIs will likely have a muted impact on Thursday.
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