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The dollar extended its losses against its major counterparts, as the Fed’s disappointing statement got mixed in with overall risk appetite.

  • AU import prices (q/q) dips by 0.1% vs. 0.7% gain expected, 1.2% growth previous
  • China industrial profits (y/y) jumps by 19.1% in June
  • Fonterra raises milk price forecasts for 2017/18

Major Events/Reports:

Fonterra raises milk price forecasts

Fonterra, one of New Zealand’s dairy giants, raised its forecast price to farmers for to $6.75 per kilogram of milksolids for 2017/18, which is 25c higher than its forecasts in May. This is good news for farmers who dealt with low payouts in 2014 – 2016.

Fonterra chairman John Wilson said the revised forecast is a reflection of the rebalancing of supply and demand in global dairy markets. He said farmers are in for a good start to the season with confidence on on-farm across the country and global demand for dairy prices on the rise.

Australia’s quarterly import and export prices

Terms of trade data from Australia printed earlier today saw decreases in both import and export prices for Q2 2017.

Imports slipped by 0.1%, mostly due to lower oil prices. Analysts had expected a 0.7% uptick against Q1’s 1.2% growth. Despite this, annual growth remains at +0.3%.

Meanwhile, exports dropped by a whopping 5.7% when market players had only priced in a 5.5% downtick against Q1’s 9.4% increase.

We don’t have far to look for the culprit. If you recall, iron ore prices dropped by 14.6% for the quarter while coal prices also fell by 7.7%. Export price gains remains at a strong 22.5% for the year.

Traders mostly shrugged off the weak readings though, likely because a pullback was expected after Q1 2017’s strong performances. Of course, it doesn’t hurt that we saw good news from China. Which brings me to my next bullet:

China’s industrial profits

Earnings for China’s industrial firms rocketed by a whopping 19.1% from a year earlier in June even as rising borrowing costs have made dents on their margins.

Profits rose to 727.8B CNY in June thanks in part to a recovery in iron ore prices after falling in Q2 2017. This pushes the H1 2017 profits to 3.63T CNY, which is a 22.0% increase from the same period last year.

Recall that the government has made it a priority to address financial risks in the economy. But with profits turning out as well as they did, investors are thinking that the regulations – which aren’t expected to tighten further until Autumn– hasn’t affected the companies’ profitability just yet.

Major Market Mover(s):

AUD

The odds were simply in favor of the Aussie today, as a not-so-hawkish FOMC statement encouraged risk-taking in the markets.

China also added into the mix with its strong industrial profits report and a report that Moody’s has upgraded China’s banking system from “negative” to “stable” on easing shadow banking concerns.

AUD/USD is up by 66 pips (+0.83%) to .8056,
AUD/JPY is up by 45 pips (+0.51%) to 89.32,
EUR/AUD is down by 78 pips (-0.53%) to 1.4593,
GBP/AUD is down by 81 pips (-0.49%) to 1.6322, and
AUD/NZD is up by 20 pips (+0.19%) to 1.0669.

USD

The Greenback extended its losses against its counterparts thanks to a not-so-hawkish FOMC statement encouraging risk-taking and further dollar weakness.

EUR/USD is up by 36 pips (+0.31%) to 1.1757,
GBP/USD is up by 45 pips (+0.34%) to 1.3151,
USD/JPY is down by 33 pips (-0.30%) to 110.89,
USD/CAD is down by 28 pips (-0.23%) to 1.2425, and
NZD/USD is up by 51 pips (+0.68%) to .7552.

Watch Out For:

  • 6:00 am GMT: Spain’s unemployment rate (17.8% expected, 18.8% previous)
  • 6:00 am GMT: GfK German consumer climate (10.7 expected, 10.6 previous)
  • 8:00 am GMT: Euro Zone’s private loans (y/y) (2.7% expected, 2.6% previous)
  • 10:00 am GMT: U.K. CBI realized sales (10 expected, 12 previous)