The weekend started with lively markets as the military coup in Turkey failed, leaving 290 dead and 6,000 imprisoned as a result. The US dollar enjoyed a boost, however, as the potential coup sparked interest in the currency as a safe-haven asset. Look for another potential bump in the dollar this morning if the latest US housing market sales data mirrors recent good news from last Friday’s better-than-expected US retail sales numbers and the prior weeks’ expectation-shattering non-farm payroll report.
The pound is trading higher at the moment, but don’t expect a good US housing market report to do it any more favors this morning. Tomorrow, the UK will release two inflation indicators — the producer price index and consumer price index — which will show data largely taken before the Brexit vote. While pre-vote data could help support the pound, investors are really waiting for post-Brexit data to come on Friday with the preliminary release of July’s PMIs from the services, construction, and manufacturing sectors. Friday’s data will provide better insight on the potential economic toll that the historic vote might have on the UK economy.
The euro took a tumble last Friday with the attack in Turkey, but is making up some ground this morning despite little data. Awaiting Thursday’s European Central Bank interest rate decision, investors have been pricing in a bias toward the central bank announcing more stimulus measures to counter the potential slowdown from Brexit. Fortunately for euro holders, the bias could limit any downside in the euro should such measures be announced at the ECB meeting.
In the East, the Chinese Yuan weakened to the lowest level versus the US dollar in five years as new home prices rose in fewer cities in June compared to the prior month. The Yen continued its slide as a risk-on appetite took over with the failed coup in Turkey, and as investors continue to anticipate more stimulus measures from the country’s central bank.
Later today, investors will be monitoring surprises from the tone of the Reserve Bank of Australia’s minutes taken from its last interest rate meeting a few weeks ago. Most analysts have priced in optimism that the RBA will decide against a near-term rate cut at the next central bank meeting,especially after Australia had its best full-time employment report since last November and China (Australia’s top trading partner) released better-than-expected Q2 GDP results. That said, any negative surprises from the minutes could dampen the Aussie dollar’s upward potential.
EURUSD: The euro is trading mostly flat with slow data, but has recovered slightly from a Turkish-coup slump last Friday.
GBPUSD: The pound is ticking up in anticipation of tomorrow’s inflation data from June.
AUDUSD: The Aussie dollar is choppy as investors await the Reserve Bank of Australia’s meeting later today.
USDCAD: The Canadian dollar is unchanged despite oil prices moving lower.