Market Drivers August 30, 2016

USDJPY Probes 102.50
AU Building Approvals Soar
Nikkei 0.91% Dax -0.07%
Oil $47/bbl
Gold $1323/oz.

Europe and Asia:
AUD AU New Home Sales -9.7% vs. 8.2%

North America:
CAD Current Account 8:30
USD HPI 08:30
USD Consumer Confidence 10:00

After a small bout of profit taking, the dollar resumed its upward path in generally subdued Asian session trade as much of the capital markets remained on summer vacation and the economic calendar was exceedingly light.

In Asia USD/JPY dipped briefly to hit 101.75, but then spent the rest of the session recovering as it ground its way slowly towards the 102.50 level. The pair could challenge the 103.00 figure this week ahead of the NFP report especially if the pre-release data proves supportive. Yesterday’s strong personal income numbers which rose at their best level in 3 months, provided further proof that US consumer is finally receiving some of the benefits of economic growth which should allow the Fed further leeway in normalizing monetary policy.

Today the market will once again hear from Fed Vice Chair Stanley Fischer, who appears to have acquired a greater degree of authority on the FOMC and who has become one of the primary voices calling for potential rate hike sooner rather than later.

Although the markets still remain skeptical about the possibility of a September rate hike – not the least because such a move would come in the middle of a heated Presidential election – if the August payrolls show a healthy 200K gain the case for rate hike would increase markedly.

Meanwhile sentiment in the market has clearly shifted towards the greenback with EUR/USD pressing the 1.1150 barrier for the past 48 hours while USD/JPY seeks to take out the 102.50 level. With little economic data on the docket save for Consumer Confidence at 14:00 GMT, and with many market participants still trying to eke out the last few days of pleasure on the beaches of Hamptons and St. Tropez, dealing this week could remain contained until Friday, but the bias remains resolutely pro-dollar for the time being.

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