GBP/USD was by far the most impressive in the risk FX space as it rallied back above 1.60 to a high of 1.609. EUR/USD is holding its ground above 1.35 as the single currency continues to cheer the German election results.
AUD/USD is sidelined at 0.937 and we don’t expect to see any moves on the AUD side of the equation, with no major local releases for the rest of the week. At 18:30 AEST we get the final read on UK Q2 GDP and the market is expecting no change to the previous read of 1.5% growth (year-on-year). We also get readings on Q2 current account balance and the market is looking for a slight narrowing of the deficit to $11 billion. A number lower than this on the current account balance could put upside risks in to future GDP reads, and therefore cable could rally back above 1.61.
Meanwhile, USD/JPY was testing some key support in the 98.50 region early in Asia and this has now been broken as the pair printed a low of 98.27. Japan’s weekly fund flows data is due out tomorrow and this is likely to result in some volatility for the yen. Tomorrow we also have Japan’s CPI numbers due out and, as usual, inflation watch is one of the most important releases on the Japanese calendar.
On the other side of the equation, Japanese officials will be hoping to see the greenback start to react positively to any consensus beating US economic releases. At the moment the USD just continues to taper off, with traders remaining bearish after last week’s Fed meeting.