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July 17: economic & forex news ★★★
Tuesday, July 17, 2012 - 06:08
Ben Bernanke is once again the hero of the market’s expectations: investors expect to hear his hints on further monetary easing as he testifies to Congress today. It’s obvious that US economic recovery really is stumbling: data released yesterday showed that retail sales fell for a third month in June, contracting by 0.5%. The Fed’s chief is speaking in front of the Senate Banking Committee and the House Financial Services Committee tomorrow.
US dollar’s weakening versus the majority of its counterparts on the news.
Also watch for US CPI data later today. Median forecast is that US CPI was unchanged last month from May when it declined by 0.3% (m/m). Annual inflation is seen sliding from 1.7% in May to 1.6% in June, below the Fed’s 2% medium-term target – another argument for more QE.
EUR/USD trades on an upside for a third consecutive day ahead of the ZEW economic sentiment release. The release may show today that the index of German investor expectations slid to minus 20 this month (the lowest since January) from minus 16.9 in June. Moody’s rating agency downgraded 13 Italian banks tonight. The IMF has slightly lowered its outlook for global growth in latest report on the world economy.
AUS/USD appreciates as the RBA meeting minutes released today made the new rate cuts less likely. The Australian policymakers reveal confidence in economy: national labor market looks stronger, China's economy wasn't slowing as much as previously anticipated and the overall mood in euro area seems to be better on the back of progress made by EU leaders late June. However, the euro zone’s debt woes still threaten the Australian economy.
NZD/USD is up despite a CPI release (inflation in Q2 increased by 0.3%, what is below a forecasted 0.5% growth).
The MSCI Asia Pacific Index (MXAP) of shares advanced 0.6%. The overall market sentiment is positive ahead of Bernanke’s testimony: demand for
USD and
JPY vs. the other key currencies has dropped.
USD/JPY strengthens after a three-day decline after touching the lowest since June 18 yesterday. According to Japan’s finance minister Jun Azumi, gains in the yen were “speculative” and officials will “take decisive action if needed.”