Asian Session Recap – July 3, 2014

  • Australia’s retail sales down by 0.5% in May
  • Australia’s June retail sales revised from +0.2% to -0.1%
  • Australia’s May building approvals up by 9.9% vs. 3.1% consensus
  • RBA Gov Stevens: AUD high by historical standards
  • Chinese official non-manufacturing PMI down from 55.5 to 55.0
  • Chinese HSBC services PMI up from 50.7 to 53.1
  • U.K. services PMI to show upside surprise?
  • Euro zone retail sales, Spanish and Italian services PMI due
  • Markets gear up for ECB statement and NFP release

Wipe out! After yesterday’s good wave, the Australian dollar was unable to stay on its feet for today’s Asian trading session. Bleak data from the Land Down Under, mixed reports from China, and jawboning from RBA Governor Stevens combined forces to knock out the Aussie.

Australia’s May retail sales report printed a 0.5% decline in consumer spending instead of staying flat as analysts predicted. To top it off, the previous month’s report was downgraded to show a 0.1% decline from the initially reported 0.2% uptick. Building approvals showed a stronger than expected 9.9% gain versus the projected 3.1% increase, yet the previous figure was also downgraded. HSBC reported an uptick in its Chinese services PMI from 50.7 to 53.1 but the official government figures showed a decline from 55.5 to 55.0.

It didn’t help that RBA Governor Stevens reiterated his remarks on the overvalued Australian dollar in his testimony today. AUD/USD fell by roughly 60 pips after Stevens’ speech, with AUD/JPY tumbled by close to a hundred pips in the past few hours.

The British pound might take center stage in today’s London trading session with the U.K. services PMI up for release. Bear in mind that both manufacturing and construction sectors have released stronger than expected results, upping the odds for a positive surprise in the services sector. Analysts expect to see a small dip from 58.6 to 58.1 though.

Euro and franc pairs might be in for a bit of consolidation prior to the ECB interest rate decision, although no actual monetary policy changes are expected. Spanish and Italian services PMI and euro zone retail sales, which are set for release over the next few hours, might have a minimal effect on the euro as traders sit tight ahead of ECB head Draghi’s press statement and the NFP release.

See also:

U.S. Session Recap

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