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The Aussie was dragged by weak Australian and Chinese data as well as overall risk aversion. Meanwhile, the dollar recovered some of its losses across the board.

  • AU AIG services index jumps from 54.8 to 56.4 in July
  • AU ANZ commodity prices dips by 0.8% vs. 2.1% uptick in June
  • Australia’s trade surplus narrows on weaker iron ore exports
  • China’s Caixin services PMI slips from 51.6 to 51.5 in July

Major Events/Reports:

Australia’s trade balance miss

The Aussie ended the Asian trading session on a weak note after Australia printed a surprisingly narrow trade surplus in June.

The economy posted a seasonally adjusted trade surplus of 0.86B AUD in June, which is not only below the expected 1.8B AUD figure but is also a whopping 58% lower than its reading in May. And if that’s not gloomy enough, May’s surplus was also revised lower from 2.47B AUD to 2.02B AUD!

We don’t have far to look for answers. Exports fell by 1.0% during the month, as iron ore prices dropped by 10% while volumes saw an 8% decline. Coal exports also reflected a normalization after recovering from Cyclone Debbie in May.

On the other side of the ledger, imports edged 2% higher with all categories (except intermediate and other merchandise goods) seeing upticks from the previous month.

A closer look tells us that an aircraft order worth $400M and an increase in telecommunications and industrial equipment purchases might have added to the upward pressure in imports.

The numbers aren’t too bad overall, but China’s Caixin services PMI report also added into the mix and further fueled the Aussie’s intraday losses.

Overall risk aversion

The Asian bourses had a weak session thanks to profit-taking from yesterday’s moves and underwhelming data releases from the major economies.

The Dow rose above the 22,000 mark for the first time this week thanks in part to Apple’s strong quarterly earnings. If you recall, tech companies in the Asian markets had also piggybacked on the rallies.

But nothing is forever and that includes this week’s trends. Profit-taking from tech rallies, a weak Chinese Caixin services PMI release, and jitters over Shinzo Abe’s Cabinet reshuffle due today all factored in a risk-averse trading environment.

  • Nikkei is down by 0.24% to 20,032.50,
  • Australia’s A SX 200 is down by 0.32% to 5,725.70,
  • Shanghai index is flat at 11,970.62, and
  • Hang Seng is down by 0.22% to 27,548.00.

Major Market Mover(s):

AUD

The Australian dollar was triple roundhouse-kicked by Australia’s surprisingly weak trade data, China’s weak Caixin services PMI, and an overall risk-averse trade environment.

AUD/USD is down by 38 pips (-0.48%) to .7927, AUD/JPY is down by 40 pips (-0.45%) to 87.75, and GBP/AUD is up by 71 pips (+0.43%) to 1.6673, and EUR/AUD is up by 57 pips (+0.38%) to 1.4940.

Oil and CAD

The Black Crack (and its corresponding comdoll) edged lower today after better demand signals from the U.S. boosted the commodity higher early this week.

Analysts point out reports that Russia and some OPEC members have shipped record high oil exports in 2017 last July, while others point to jitters ahead of the Baker Hughes rigs count as possible reasons for the dip in oil prices.

In any case, both Brent and WTI crude oil prices fell by 0.4% to $52.16 and $49.40 respectively. Meanwhile, USD/CAD is up by 23 pips (+0.18%) to 1.2596 and CAD/JPY is down by 15 pips (-0.17%) to 87.89.

USD

Overall risk aversion and a bit of profit-taking from the previous sessions’ price action supported the Greenback against most of its major counterparts.

EUR/USD is down by 13 pips (-0.11%) to 1.1842, USD/JPY is up by 4 pips (+0.04%) to 110.72 after rising from a high of 110.83, and GBP/USD is down by 8 pips (+0.06%) to 1.3216.

Watch Out For:

  • 7:15 am GMT: Spain’s services PMI (58.4 expected, 58.3 previous)
  • 7:45 am GMT: Italy’s services PMI (54.2 expected, 53.6 previous)
  • 7:50 am GMT: France’s final services PMI expected to remain at 55.9
  • 7:55 am GMT: German final services PMI expected to remain at 53.5
  • 8:00 am GMT: ECB’s economic bulletin
  • 8:00 am GMT: Euro Zone’s final services PMI expected to remain at 55.4
  • 8:30 am GMT: U.K. services PMI (53.6 expected, 53.4 previous)
  • 9:00 am GMT: Euro Zone retail sales (0.0% expected, 0.4% previous)
  • 11:00 am GMT: BOE’s Super Thursday. Read Forex Gump’s preview here!