Aussie Tops Winners On The Day


The Australian dollar gained on the day to top our three most market moving pairs.  Sparking off the day’s bid tone was a better than expected Cashcard retail index reading.  Suggestive that the consumer is alive and strong, the report rose 0.4 percent in the month of June as consumers increased their spending.  The higher consumption rate will likely feed into further economic growth with estimates for a higher gross domestic product being revised to an above 3 percent acceleration for the annualized comparison.  Contributing to the higher rate of consumption is the fact that the labor market remains extremely tight.  Currently at record levels, the lack of unemployment is likely to spur further negotiations of higher wage packages.  IN turn, the push will likely bolster further inflationary pressures, which are currently running at a 3.7 percent clip on the year on year.  Coupled with lessened risk aversion on the day ahead of the US employment report, traders bid the commodity major higher.  Additional upticks in metals and gold contracts assisted in taking the AUDUSD pair to the session highs before stopping short of the 0.7475, a figure rumored to be riddled with stops.  Selling pressure is inevitable at this point with a barrier option expiry helping to keep the currency pair lower into the Asian session.




Interest is noted by buyers at the 0.7400 figure with further bidding likely below.  At this point, offers are being taken at 0.7470 and above with heavy pressure emerging at the 0.7500 figure.  With option expiry rolling off tomorrow, the pair looks to be kept under pressure for a majority of the overnight.




Bulls Still In Favor Of AUD


Continued weakness in the New Zealand dollar kept the major losing against the Australian leg of the AUDNZD cross pair.  Fundamentals are still siding with the Australian economy following dour data in the Kiwi economy.  The pressure is likely to keep the Kiwi under bearish tones with sellers re-emerging on any rally or positive pullback.  With no economic data on the front for the Kiwi economy, dollar fundamentals are looking to play an important role, as with most other majors on the day.  Nonetheless, excluding any dollar related news, the pair ranks as our point mover of the day outpacing the other two candidates at the close.




Profit taking is likely to take place in the underlying spot as the cross continues to hover the session high.  Some selling is noted above at the 1.2350 figure and slightly above with bidding emerging around the 1.2250 and 1.2200 figures.




Canadian Softness Lends Cross A Hand


Canadian weakness gave the Australian dollar leg the upper hand on the session as softer Ivey figures balanced the major pair.  On the month, the Ivey purchasing survey dipped to a 62.2 reading, below the 75 figure seen last month.  Although lower, the result was still positive as the figure continues to remain in expansionary suggestions, buoyed by a better than expected rebound in building permits.  The report sets up for Loonie strength very well ahead of the employment report and may lend to some strength next week when the Bank of Canada rate decision.  However, expectations are for further dovishness to be portrayed by policy makers as the current currency appreciation has effectively trumped Governor David Dodge’s attempts to efficiently control inflationary pressures.  On the interest rate front, with rates likely to rise in the Canadian economy, speculation is also siding with another 25 basis point rate increase by the Reserve Bank of Australia.  Still fighting inflationary pressures, this would place even further emphasis on a sustained widening of the interest differential in the pair.




Strong buying in the Canadian major look to keep any momentum in the cross to a minimal in the overnight and Asian sessions.  Increased bidding is keeping the USDCAD afloat as orders are centered around the 1.1100 figure.