Perhaps data from China over the weekend, which showed that new and existing home price data was up significantly in some of the major regions like Shanghai and Beijing, has helped push AUD higher. There is also speculation that China is looking at new easing measures, and they have already been supporting local governments.
Looking at some of the event risk on the calendar this week, we have the RBA’s monetary policy meeting minutes. After a fairly brief statement, this should give a bit more clarity about the RBA’s stance and whether or not we can expect another cut. The market will be looking for confirmation of an easing bias, and if the minutes in any way show a wait-and-see approach then we can expect the AUD to extend its short term squeeze higher into the 0.93 region.
USD/JPY has gotten off to a poor start in Asia and dropped to ¥97.43 on the back of weaker than expected trade balance numbers. Japan’s adjusted trade balance came in at -¥741.3 billion (versus expectations of -¥598.7 billion). We don’t see any support for the pair until the ¥97 region and there isn’t much on the Japanese economic calendar to look out for this week. On the USD side of the equation, expectations of tapering will continue to shape up with FOMC meeting minutes due out and the Jackson Hole symposium later in the week.
On the European front, plenty of manufacturing and services PMIs are due out and most of those readings are expected to come out in expansionary territory. This leaves room for disappointment, particularly with the euro trading above $1.33. The pair is currently sidelined at $1.334 in Asia after having topped out at $1.338 in Friday’s US trade.