Good morning from Hamburg. Looking back to July, we saw a rebound in the USD, and a drop in crude oil, indicating a bit of pressure on the market. Those were some of the positive things in July; the negative side being that the days are starting to get shorter, and summer is creeping closer to autumn. However, the season has plenty of new, interesting, things in store for us, such as central banking interest rate decisions.
Market review
The New Zealand´s Q2 labor cost index indicated an 0.8% increase in private sector salaries and wages. As expected, labor costs remained strong and increased, but were not seen as preventing the RBNZ from cutting interest rates further. Investors expect a rate cut of 50 basis points when the RBNZ holds its policy meeting in September. The NZD/USD lost 0.81 % on Friday and closed at 0.7268.
The USD rose against a basket of currencies on Friday, after better than expected US nonfarm payroll and manufacturing data for July eased feares of a deeper pullback in the overall economy. The economic data, coupled with other recent reports that have also been surprisingly upbeat, provided some scope for Federal Reserve to raise interest rates by yearend or early 2009 to tackle inflation. Against the EUR, the USD is up 0.3 percent at 1.5556. Against the GBP, USD is up 0.5 % with a close at 1.9736 and 0.2 % against the CHF.
The CAD fell to its lowest level since mid June on Friday, and was headed for its second straight weekly loss as US job data was better than expected, offering a boost to the USD. Last month the AUD fell 1.7 percent against USD, for its worst month since March, while the NZD fell about 3.7 percent in July, which was the worst month since August 2007, the beginning of subprime crisis.
AUD/USD
The Aussie extended high losses last month and has fallen to the 0.93 level. AUD/USD was supported at this rate in May too, so it could be the bottom of the decrease. Keep an eye on the hourly charts to see how it develops.
USD/CHF
After leaving the downward trend channel the CHF dipped to the 1.05 level where it touched it three times before. A trend change is signed of the dojis as well, so it could be possible that the currency pair turn might and decrease back to the 1 even level.
