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Video for July 21st, 2008 (5 min): European Stocks Rebound From Weak Start Helping To Boost Risk Appetite

The currency market was expectedly quiet today as the fundamental docket was light.

UK Rightmove Index Declines 1.8% on the Year
Let's start in the UK. The Rightmove House Price Index declined 1.8% in July, after declining 1.2% in June. On the year, house prices are down 2.0%. The British housing market is stumbling. Even as the number of new sellers has declined 20% since a year ago, inventory continues to increase to record levels.

EUR/GBP - Housing Data Pressures Pound Overnight

 

The EUR/GBP is in an upward channel since late Thursday. The poor house price release from the UK weakened the pound, but it pared those losses against the euro overnight. By afternoon New York trading, the pair is back to only 20 pips above the session open. 

AUS Producer Prices Cool in 2nd Quarter, Motor Vehicle Sales Show Declining Trend

Australia's June quarter Producer Price Index grew 1.0%, less than the forecasted 1.6%, and May's 1.9%. This is a welcoming sign for the policy makers of the Reserve Bank of Australia, who anticipate inflation to stabilize by year's end.

In a separate release new motor vehicle sales grew 1.0% in June. However the trend estimate was down 0.4%, continuing a decline since January.

AUD/NZD - Aussie Climbing vs Kiwi

 

The Aussie gained against the Kiwi overnight and into New York trading even with the less than expected producer price inflation numbers. Australia's fundamentals are relatively stronger than New Zealand's as the economy is being supported by robust export growth.

SWZ Producer Prices Ease in June

The Producer and Import Prices Index eased off the 1.2% in May, which was the highest since March 1993. Oil prices continue to be the major contributor of inflation, as it increased 7.6% in June, and 34.1% since June 2007.

US Leading Index Measures -0.1% For June

In the US, Conference Board's leading indicators for June, showed a failure to rebound. The economy continues to slow, as staggering oil prices basically trumped any optimism. May's reading was revised down from a 0.1% growth to a 0.2% drop.

GBP/JPY - Pound Recovers vs Yen as European Stocks Rebound from Weak Start

 

Risk appetite took a swing globally. The European and British equities market started poorly and then recovered. The GBP/JPY pair's V formation highlights the shift in sentiment overnight. After hitting an intra day low near 212.10, the pair surged to hit the intra-day high at 213.80, then consolidated around the 213.40 area in the New York session.

USD/JPY - Dollar Gains Overnight, But Relinquishes Gains in NY Trading

 

The US dollar traded in tight ranges today and was at the same level it started the week with by 2:00PM EST. Against the yen, risk sentiments were behind the moves as it reflected the equities markets much like the GBP/JPY pair. Wall Street opened higher, but retreated during midday almost tick for tick with the USD/JPY pair.

Upcoming Releases 

Upcoming releases for tonight and tomorrow will be light as well. Japan releases its All Industrial Activity Index tonight. Overnight, Switzerland releases its Trade Balance.

Tomorrow Canada will release retail sales figures, while the US will release its House Price Index and Richmond Fed Index.