Action Insight Mid-Day Report
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Dollar Remains Firm after Strong Inflation and Weak Housing
Dollar remains firm in early US session after mixed data which continues to show deepening recession in the housing markets and skyrocketing inflation. Housing starts dropped -11.0% to 0.96M annualized rate in Jul, inline with expectation. Meanwhile,building permits dropped much more than expected by -17.7% to 0.94M annualized rate. The data argues that surprised rebound in Jun was just a false dawn. Headline PPI growth doubled markets forecasts by 1.2% mom in Jul, pushing yoy rate to 27 years high of 9.8% yoy in Jul. Core PPI jumped 0.7% mom versus expectation of 0.2%, pushing yoy rate much more than expected to 3.5%.
After all, the outlook in the forex markets remains unchanged. Dollar's intraday upside momentum is seen diminishing but there is still no clear sign of a short term top against Euro, Sterling and Swissy yet. USD/CAD, USD/JPY and AUD/USD might consolidate further but once they prior trend resumes, more greenback buying could be triggered elsewhere. Also, development in yen crosses will be closely watched and the crosses is possibly set for down trend resumption.
Euro remains pressured after mixed ZEW report today. The economic sentiment in Germany in Eurozone did surprised the markets on the upside by improving much more than expected to -55.5 and -55.7 in Aug respectively. However, the positive effect was undone by sharp deterioration in the current situation indicator, from 17 to -9.2 in Germany and -3.3 to -22.2 in Eurozone.
BoJ left target overnight call rate unchanged at 0.5% as widely expected. The statement indicated that the bank had little option other than being on hold. CPI inflation is expected to be "somewhat higher" over the coming months while economic activity has slowed sharply.
RBA minutes echoed prior communications and reaffirmed the bank's easing bias. The minutes said that "less restrictive monetary conditions could soon be called for, otherwise the risk of a deeper and more persistent slowing in the economy would increase."
More Technical Analysis Reports Here
Dollar Remains Firm after Strong Inflation and Weak Housing
Dollar remains firm in early US session after mixed data which continues to show deepening recession in the housing markets and skyrocketing inflation. Housing starts dropped -11.0% to 0.96M annualized rate in Jul, inline with expectation. Meanwhile,building permits dropped much more than expected by -17.7% to 0.94M annualized rate. The data argues that surprised rebound in Jun was just a false dawn. Headline PPI growth doubled markets forecasts by 1.2% mom in Jul, pushing yoy rate to 27 years high of 9.8% yoy in Jul. Core PPI jumped 0.7% mom versus expectation of 0.2%, pushing yoy rate much more than expected to 3.5%.
After all, the outlook in the forex markets remains unchanged. Dollar's intraday upside momentum is seen diminishing but there is still no clear sign of a short term top against Euro, Sterling and Swissy yet. USD/CAD, USD/JPY and AUD/USD might consolidate further but once they prior trend resumes, more greenback buying could be triggered elsewhere. Also, development in yen crosses will be closely watched and the crosses is possibly set for down trend resumption.
Euro remains pressured after mixed ZEW report today. The economic sentiment in Germany in Eurozone did surprised the markets on the upside by improving much more than expected to -55.5 and -55.7 in Aug respectively. However, the positive effect was undone by sharp deterioration in the current situation indicator, from 17 to -9.2 in Germany and -3.3 to -22.2 in Eurozone.
BoJ left target overnight call rate unchanged at 0.5% as widely expected. The statement indicated that the bank had little option other than being on hold. CPI inflation is expected to be "somewhat higher" over the coming months while economic activity has slowed sharply.
RBA minutes echoed prior communications and reaffirmed the bank's easing bias. The minutes said that "less restrictive monetary conditions could soon be called for, otherwise the risk of a deeper and more persistent slowing in the economy would increase."
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