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Bob Mason
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Earlier in the Day:

It was another relatively quiet Asian session on the economic calendar this morning.

Economic data through the session was limited to Australia’s NAB Business Confidence figures for July.

Outside of the numbers, we expect the Yuan and any chatter from Washington and Beijing on trade to remain the key driver.

With the global financial markets sensitive to geopolitical chatter, any further hint of an Italian snap election could also test risk sentiment. With Italy having the 9th largest economy, political disruption amidst the current economic climate won’t be a good thing.

For the Aussie Dollar Dollar

The NAB Business Confidence Index rose from 2 to 4 in July, coming in ahead of a forecasted rise to 3. According to the latest survey,

  • Following a deterioration in business confidence, forward indicators continue to paint a bleak picture near-term.
  • In July, confidence saw a marginal improvement after a slide in June, while conditions saw a further decline.
  • Forward orders sat well below their long-run average and in negative territory.
  • While capacity utilization recovered to around the long-run average, employment conditions worsened.
  • Looking at the sub-indexes:
    • Business conditions slipped from 4 to 2, with the trading sub-index falling from 7 to 6 and the employment index falling from 5 to 0. The profitability index recovered from -1 to 0 in the month.
    • The exports sub-index fell from 1 to 0.
    • On the positive front, there was some evidence of price pressure. The purchase costs sub-index rose from 0.7 to 1.0, with the final products prices sub-index rising from 0.2 to 0.5.
  • For the RBA, the survey continues to point to weakness in the retail sector. The NBA survey noted that weak household income growth and high debt levels remain a contributory factor.

The Aussie Dollar moved from $0.67560 to $0.67605 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.12% to $0.6760.


At the time of writing, the Japanese Yen was down by 0.07% to ¥105.37 against the U.S Dollar, while the Kiwi Dollar was up by 0.08% to $0.6453.

In the Asian equity markets, it was risk-off early in the session, as the majors responded to the U.S slide from Monday. The Nikkei led the way early, sliding by 1.21%. While the Hang Seng and CSI300 were down by 0.86% and 0.57% respectively, the ASX200 was down by a more modest 0.09%.


The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Germany and the Eurozone’s ZEW Economic Sentiment figures will be the key driver. Finalized July inflation numbers out of Spain and Germany will likely have a muted impact on the day.

While we can expect the numbers to have an impact, geopolitics will also be in focus. While the U.S – China trade war will remain the key driver, further updates from Italy will also influence on the day. And there’s HK to factor in…

At the time of writing, the EUR was down by 0.05% to $1.1208.

For the Pound

It’s a busy day ahead on the data front. Wage growth and employment figures are due out of the UK later this morning.

While we will expect wage growth to have an impact, July’s claimant count figure will likely have the greatest impact early on.

With economic indicators now flashing red, weak numbers today would weigh heavily on an already defensive Pound. Sub-$1.20 levels wouldn’t be far fetched ahead of tomorrow’s inflation figures.

Barring any chatter on Brexit, sentiment towards the UK economy will provide the Pound with direction on the day.

At the time of writing, the Pound was down by 0.01% to $1.2075.

Across the Pond

It’s a relatively quiet day for the Greenback. Key stats due out of the U.S later today include July inflation figures.

We can expect the Dollar to be sensitive to any easing in inflationary pressures. Negative sentiment towards the U.S economy, fueled by the escalation in the U.S – China trade war, has raised the prospects of another FED rate cut.

Outside of the numbers, expect any chatter from the Oval Office to also provide direction on the day.

At the time of writing, the Dollar Spot Index was up by 0.08% to 97.457.

For the Loonie

It’s another quiet ahead on the economic calendar. There are no material stats due out to provide the Loonie with direction.

While there are no material stats, OPEC’s monthly report will likely garner plenty of interest. With the Saudis looking to stabilize crude oil prices, the focus will be on whether there is any intention to rebalance output.

The Loonie was up by 0.01% at C$1.3238, against the U.S Dollar, at the time of writing.

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