Sterling dropped for BOE inflation report and commodity currencies bounced

The Sterling plummeted to 1.67 against Dollar last night, after the BOE Governor Carney’s dovish speech. Carney implied that the plain wage growth would delay the timing for rate rising. The next bears’ target will be March’s low at the 1.66 integer level as the space for falling Sterling has been opened since it broke the uptrend channel. It is likely that the current level at 1.67 will soon break through. A noteworthy aside though, the UK unemployment rate fell to 3% in July, confirming the robust recovery of the economy. Can the UK experience a solid growth without inflation pressure?

U.S. Retail Sales released a no growth result in July, disappointing investors as expectations were set at 0.2% growth. This is the lowest pace in the recent 6 months. The USD was under pressure after the data. Aussie led the rebound of commodity currencies against Dollar. It rose back beyond the 0.93 level. However, don’t forget the fact that 0.9320 is the neckline of head-and-shoulders pattern which we have mentioned a couple times. The near term outlook of Aussie is still permissible.

Japan’s Q2 economy contracted by 6.8% as expected. Yen kept its slow depreciation against major currencies as investors are still cautious of the sudden rising of the Yen in reaction to the warfare in Middle East.

Asian stock markets finished with mixed results yesterday. The Nikkei Stock Average rose 0.35% despite the large contraction of the Japanese Q2 GDP. The Shanghai Composite edged 0.06% higher to 2223. The Australian ASX 200 retreated 0.28% to 5514. In European stock markets, the FTSE gained 0.37%, the German DAX surged 1.43%, and the French CAC Index advanced 0.78%. U.S. stocks closed higher as downbeat retails sales lowered rate raising expectation. The Dows closed rose 0.55% to 16652. The S&P 500 gained 0.67% to 1947, and the Nasdaq Composite Index was up 1.02% to 4434.

On the data front, light releases in the Asian period, but French and Germany Q2 GDP will be out at the beginning of European session, followed by Eurozone data. Also, the weekly US Unemployment is at 22:30 pm.