Dollar recoups losses ahead of GDP data.

Key Movers

The dollar has recouped some of its losses incurred on Friday and early yesterday as traders put Trump's latest tirade on the back burner, for now. Data-wise traders' focus will turn to Friday's US Advance GDP number for the second quarter which is expected to show a healthy uptick to an annualised 4.1% from 2% seen in Q1. Ahead of this any Trump outbursts could derail the recovery and news re: trade tensions with China will likely dominate headlines. Interestingly the Peoples Bank of China have been quietly weakening the Yuan lower over recent weeks with USD/CNY now at a one year high. A weak Yuan offsets the trade tariffs imposed by Trump softening the blow on the Chinese economy as well as no doubt giving Trump some more ammo for some tweets in due course. It will be interesting to see how long this devaluation continues in the face of continued hostility from the US President. USD/JPY has pushed back above 111 and EUR/USD is back below 1.17.


The monthly tranche of PMIs have been released this morning with a mixed bag of results being shown. The Eurozone’s purple patch of expansion seen late last year has been replaced with a more modest pace of output of late highlighted by the reduction in PMI figures. German manufacturing for July printed 57.3 beating expectations but some way off the series of >60 readings we saw either side of Christmas. Eurozone Manufacturing as a whole came in at 55.1 ahead of the 54.7 forecast. The EZ Services number printed 54.4 slightly worse than the 55.0 predicted. This week’s main event from the euro is the ECB Interest Rate decision due on Thursday. No change in policy is all but guaranteed however the markets focus is the timeframe of when the ECB will look to tighten policy. Rates are currently predicted to be raised in the H2 2019 so any hints that it will be sooner will likely see a euro rally. GBP/EUR is at 1.1220.


Tonight Australian data kicks off with quarterly inflation numbers being released Down Under. Both the overall and the trimmed reading (which strips out the 30% most volatile goods valued) are predicted to print 0.5% increases for the second quarter, broadly in line with the previous quarter’s readings. A print higher than expected would see the Aussie rise as rate hike expectation would be brought forward. Even if we see a big overshoot its unlikely the RBA would move this year, currently the middle of next year is seen as the date for the next hike. With the broad dollar recovery seen over the past 24 hours AUD/USD is back under .74 currently sitting at .7375. GBP/AUD sits at 1.7775.


USD/CAD has pushed back up towards 1.32 overnight ahead of tomorrow’s US Crude Oil Inventories which will be this week’s main event for the loonie. Apart from the oil numbers its very quiet in Canada this week so Trump and the US GDP number will likely be the main drivers for the local dollar. GBP/CAD is at 1.7270.


Tonight's NZ data kicks off with Trade Balance numbers which are expected to show a NZD200 surplus. Obviously anything higher will likely give a small boost to the Kiwi however like much the rest of the world the ECB rate decision and US GDP number will be this week’s key driver. NZD/USD is back under .68 with GBP/NZD at 1.9295.