AUD rebounds on private sector credit jump

The greenback was mostly firmer against the majors with the exception of the AUD which finally managed to regain some ground. 

AUD/USD had been threatening to breach 0.87 but has since bounced to within striking distance of the 0.88 level which it tested in US trade. Perhaps some level of stability being restored in struggling emerging markets was responsible for the bounce in the AUD. Commodities actually remained under pressure suggesting it wasn’t a clear risk-on theme. With the Chinese Lunar New Year kicking in it’ll be interesting to see how some commodities respond to reduced activity. This could put a dampener on the AUD’s recovery in the near term. On the local economic calendar today we had PPI which came in well short of expectations at just 0.2%, while private sector credit ticked higher to 0.5%. This data pushed AUD/USD back above 0.88 with the near-term positive momentum remaining intact. Tomorrow’s manufacturing PMI out of China has the potential to cause a big move when we return to trade on Monday. The market is expecting the PMI reading to come in at 50.6 and no doubt there will be a lot of sceptics out there after the recent run of data.

Yen muted reaction to data dump

The yen has been in focus today on the back a data dump from Japan. Already we have received manufacturing PMI, household spending, CPI, the unemployment rate and industrial production data. All the CPI readings and the unemployment rate came in ahead of estimates and really showed that the Japanese economy has made significant progress. However, household spending came in below estimates showing that perhaps the saving culture in Japan is still fairly prominent.

Industrial production was also a touch weaker but this could be to do with seasonality issues. The reaction to the data was relatively muted with USD/JPY remaining sidelined at 102.75. US dollar strength had aided a recovery in the pair off its lows in the 102 region. We still have housing starts data due out later today, but I doubt this will impact the yen much. On the USD side of the equation we have Chicago PMI, personal spending/income, consumer sentiment and inflation expectations due out. Fed member Fisher is also set to speak and might give further hints on tapering.

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