Article Highlights

  • Australia’s retail sales down by 0.1% in July vs. expected 0.4% gain
  • Australian July trade deficit at 2.46B AUD vs. expected 3.10B AUD shortfall
  • Australia’s June trade deficit revised from 2.93B AUD to 3.05B AUD
  • Chinese banks on holiday today
  • U.K. services PMI to improve from 57.1 to 57.6?
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With Chinese traders off on a bank holiday, forex market watchers barely had to worry about another stock market tumble, focusing on Australian economic releases instead. Headline figures came in mixed, with the July retail sales report showing a 0.1% decline versus the projected 0.4% uptick and the trade balance indicating a smaller deficit of 2.46 billion AUD instead of the estimated 3.10 billion AUD shortfall. However, the June trade deficit suffered a downgrade from a 2.93 billion AUD deficit to 3.05 billion AUD.

Because of that, the Australian dollar is still in the red, with AUD/USD down by 33 pips and testing the .7000 floor (-0.47%), AUD/JPY down by 35 pips (-0.39%), AUD/NZD down by 32 pips (-0.28%), and AUD/CAD down by 48 pips (-0.51%).

Yen pairs seem to be taking advantage of the return in risk appetite, with EUR/JPY up by 16 pips to 135.25 (+0.12%), GBP/JPY up by 10 pips to 184.18 (+0.07%), and NZD/JPY up by 11 pips to 76.41 (+0.18%).

In the upcoming London trading session, forex traders could focus their attention on the release of the U.K. services PMI at 9:30 am GMT. The index is expected to improve from 57.1 to 57.6, reflecting a stronger pace of expansion in the industry. Keep in mind that both the manufacturing and construction sectors churned out weaker than expected PMI readings, suggesting a potential downside surprise for the services industry as well.

As for the euro, the final services PMI readings from its top economies are lined up and any revisions could have an impact on the shared currency’s short-term moves. However, the bigger market catalyst for euro pairs today might be the ECB interest rate statement at 12:45 pm GMT, as Draghi’s remarks on inflation and the potential impact of the stock market selloff on the euro zone economy could spur strong moves. Stay on your toes!

See also:

U.S. Session Recap

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