- Nikkei closed nearly 4% lower for the day
- Chinese CB leading index up by 0.9% in July
- New Zealand quarterly inflation expectations steady at 1.9%
- German Ifo business climate index and Swiss employment level due
Retracement or reversal? After making strong forex moves, major currencies tried to take it easy in today’s Asian trading session. Other financial markets seemed eager to carry on with the carnage, as the Nikkei closed 3.96% lower for the day while the Shanghai Composite index was down roughly 7%.
Economic data wasn’t so bad, with the Chinese CB leading index chalking up a 0.9% increase for July and New Zealand reporting that quarterly inflation expectations held steady at 1.9%. AUD/USD continues to lick its wounds and is up by 49 pips (+0.65%), while NZD/USD is also in recovery mode and is up by 45 pips (+0.68%).
Yen forex pairs are looking much better, with USD/JPY up by 55 pips (+0.46%), EUR/JPY up by 47 pips (+0.35%), GBP/JPY up by 113 pips (+0.61%), and AUD/JPY up by 88 pips (+1.04%). Risk appetite still seems to be generally week but it looks like traders are starting to book profits from their recent short positions.
Up ahead, Germany is set to print its Ifo business climate index at 9:00 am GMT and might show a drop from 108.0 to 107.6 in August. Switzerland will be releasing its employment level for Q2 and is expected to show a climb from 4.23 million to 4.24 million, which could allow the franc to hold on to its forex gains.
Don’t forget to keep close tabs on European equity performance in the London trading session, as these stock market moves and commodity trends have been mostly responsible for pushing currency pairs around these days. Be careful out there!
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