Yesterday’s upbeat US ISM Manufacturing PMI reinforced speculation that the Federal Reserve will start unwinding asset purchases, underpinning
USDJPY pair. Nonetheless, USDJPY is weighed as a military strike by USA and France against Syria is getting more likely. US congressional leaders are pushing for action while UK parliament denied operation before UN report. The US dollar against the Japanese Yen jumped on manufacturing data to 99.84 but quickly retreated slightly, weighed by key resistance at 100 and ahead of BOJ monetary statement the currency pair most probably will remain in 99.84/99.14 consolidation zone.
Australian economy surprised traders yesterday by growing more than expected, defying forecasts and recent RBA concerns that falling mining investment is hurting its performance. The Aussie GDP grew in the 2nd quarter by 2.6% in annual terms beating estimates of 2.4% and up compared to previous quarter at 2.5%, quarterly grew by 0.6%, more than estimated 0.5%. The
AUDUSD resumed its upside bias and surged to cap at 61.8% of 0.9231 to 0.8890, at 0.9102. As of writing though the pair breached that resistance shifting focus to lid at 0.9231.
RBA’s recent comments that is ready to cut further key rates “should the economy materially worsens” are likely not to be repeated after stronger growth. At the moment market is discounting possible reversal of RBA’s dovish tone and for that reason we would expect the Aussie to remain bullish in the intraday.
Looking ahead, European PMI reports are watched followed by GDP release for the second quarter. The EURUSD dropped to 5-month low in recent trading as the greenback was strengthening on tapering expectations while concerns over Euro zone debt crisis persist. Back to data front, Canadian monetary policy decision is also in focus, widely anticipated that the BOC will maintain 1% key rate. The USDCAD has been in 1.0566/1.0472 tight range ahead of the monetary decision.
