Australia: Yesterday saw the release of the Australian employment data for July which came in down 0.1k compared to the forecasts of a rise of 10k. The unemployment rate rose to 5.1% after remaining unchanged at 4.9% for four consecutive months. While this is unlikely to weigh on the RBA’s rates decision it will add to the cause for the RBA Board to sit tight and wait. Prior to the employment data yesterday the AUD was trading at 1.0220 and then dropped 1cent after the announcement, though the selloff was short lived and the AUD staged a nice bounce pushing back to the 1.0300 level by late afternoon.

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There seems to be good buying demand by investors for the AUD, and recent comments suggest that Asian Central Banks have a good appetite for both the Australian dollar and Australian bonds which will help support the AUD on dips. With a lack of local information released today, we expect that the AUD will trade closely with our equity market, which are expected to be stronger after last night’s gain in the offshore markets.

Majors: Overnight in the US equity markets finished firmer and recovered most of its previous day’s losses with the Dow finishing up 3.9%, the S&P up 4.6% and the Nasdaq up 4.7%. US Treasuries fell as did the dollar as an unexpected drop in the jobless claims and better than expected earnings results eased concerns the economy is slowing. The first time applications for jobless benefits decreased 7k in the week ending Aug 6 to 395k, the lowest since early April. Companies reporting also helped the positive mood, with Cisco Systems gaining 16% the most in nine years as its profit report topped analyst’s estimates.

News Corp also rallied 17% its biggest gain since 2008 on its better than expected earning result. The big mover over the past day has been the CHF with its recent rally on safe haven buying causing problems for its Central Bank. The Swiss National Bank in recent days has mentioned that they would charge fees for large deposits in an attempt to slow the rapid strength of the CHF.

Overnight the CHF fell on speculation that the Swedish National Bank would resort to dramatic measure to weaken its currency. Some even suggested that Switzerland could even take the drastic step of pegging its currency to the euro. While it seems unlikely this will happen the speculation is likely to continue to slow the strength of the CHF.
Economic Calendar
12 AUG JP Industrial Production JUN
EU Euro-zone Industrial Production JUN
US Retail Sales JUL