Market Drivers for July 29, 2013
US equities see some profit taking sending high beta FX lower
USD/JPY drops through 98.00 as Nikkei sinks
Abe – still uncertain about sales tax implementation
Nikkei -3.32% Europe -0.40%
Oil $104/bbl
Gold $1330/oz.

Europe and Asia:
JPY BOJ Kuroda Speaks at Research Institute of Japan
JPY Retail Trade 1.6% vs. 1.7%
GBP Net Consumer Credit 1.5B vs. 1.4B
GBP Mortgage Approvals 58K vs. 60K

North America:
USD Pending Home Sales -0.4% vs. -1.1%

High beta FX were generally lower in quiet Monday North American trade as mild risk aversion and failed technical breakouts helped the dollar to find a bid in early afternoon dealing. With US equities slightly lower as Dow declined about -.35% the greenback gained some ground with Aussie particularly hard hit as the pair dropped below the 9200 level once again.

The Aussie has been unable to clear the key 9300 level for the past month and a half as sentiment towards the unit remains negative. Investors continue to worry about the spillover effects of the slowdown in China and the potential for further rate cuts from the RBA.

While the central bank is expected to remain stationary at it meeting next week, tonight’s speech by RBA Governor Glenn Stevens could provoke more selling if he adopts a decidedly dovish tone. In the meantime suggestions by some analysts that Chinese growth may have actually turned negative when looked at from an import demand perspective, only helped to fuel worries about the Australian economy in the second half of the year.

The euro also gave up ground after the pair failed to clear the 1.3300 barrier earlier in the day. A large option expiry apparently put a cap on the pair and after several failed attempts the euro slid through the 1.3250 level in morning NY trade.

With only Pending Homes on the economic calendar currency markets found little to focus on and were driven mainly by equity market flows. Although today and tomorrow may be typical of quiet summer trade, the action is likely to pick up markedly as the week proceeds with FOMC, ECB and NFP all in queue.

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