Australia left its key interest rate unchanged Tuesday

Good morning,

- Oil, stocks sink on weak data, Europe shines…

- BoJ's Iwata says the Yen won't fall further if rate differentials are already priced in. What's more, BOJ member IWATA says, BOJ is targeting price stability, not FX.

- Australia left its key interest rate unchanged Tuesday as a weaker currency aids local firms and soaring Sydney home prices argue against additional stimulus. Central bank Governor Glenn Stevens and his board kept the cash rate at a record-low 2 percent, as predicted by markets and economists following reductions in May and February. The currency fell through 73 cents last month and is down about 35 percent since a peak in 2011.

- Oil futures prices sank to a six-month low on Monday, weighed by oversupply and weaker demand expectations, while equity markets in Asia and on Wall Street fell as factory data from China and the United States disappointed. Brent slumped to its lowest since late January on worries about oversupply as OPEC pumped at record levels in July, adding to demand concern after weak data from China, the world's second largest energy consumer. U.S. crude hit its lowest since March. The resource-linked Canadian dollar was at its weakest in more than a decade against its U.S. peer as crude prices sank.

- Bank of Tokyo-Mitsubishi on EUR/USD: "Indeed, the weakness in the second half of July suggests that is now taking place. However, we suspect there’s a lot more potential selling to come," BTMU projects. "While the euro is weaker on the month, the fall in commodity prices could actually be offering the euro some temporary support. The commodity price drop means that other currencies more tightly linked to commodities have performed worse and hence that is limiting the appetite for selling the euro versus these currencies that are weakening due to the commodity price sell-off," BTMU argues. "However, falling oil prices, if extended, will complicate the ECB’s achievement of its inflation target that could mean the ECB needs to extend QE while China weakness that keeps capital flowing out of China means reduced FX reserves that removes reverse recycling support for the euro as well," BTMU adds. "Despite the resolution to the crisis in Greece, at least for now, we maintain that the fundamentals point to renewed EUR weakness and a decline in EUR/USD toward parity," BTMU projects. BTMU targets EUR/USD at parity by year-end and at 0.96 by Q1'16-end.

- Japanese cash earnings in June dropped 2.4% year-over-year. Adjusted for inflation, dropped 2.9%. Worst since Dec 2009.

- Was Athens Stock Exchange's 16% drop after a 5-wk closure a shock, Shouldn't have been.

- The drop in oil has led to $USD/CAD advancing for 9 consecutive weeks, says Forex Trading Instructor Tyler Yell, CMT.

- $DAX - Fifth Day Up, Watching For Signs of Waning Momentum

- Spanish Unemployment. The number of unemployed registered at the offices of the Public Employment Services has been reduced to 74 028 people in July, the biggest drop this month since 1998 and more than double that recorded in July 2014 (29,841 unemployed). This is also the sixth consecutive month to reduce the number of unemployed. In the last eight years, unemployment had declined on average in July by 37,000 people. Employment registers its biggest decline in July since 1998, with 74,028 fewer unemployed.

- Watch for today: US factory orders, EU Housing PPI, UK Housing.

Have a nice Day!