The U.S. dollar rose against the yen, updating the yesterday’s high, reaching Y103.25. Support for USD/JPY have the recent comments of fed officials that strengthened the probability of a rate hike. Last Friday, the fed Chairman Yellen said to increase base rates have risen in recent months due to the improved situation on the labour market and expectations of stable economic growth. However, she did not specify when the fed intends to act, stating that a rate hike will be data dependent. However, yesterday the Deputy head of the fed, Fisher also reiterated that the pace of rate hikes will depend solely on the situation in the economy. “I don’t think at the time when we start to raise rates, we’ll know whether it’s a single promotion or multiple. It completely depends on what will happen in the economy,” Fisher said. According to the futures market, the probability of a rate hike in September is 24%. Meanwhile, the chances of increase in rates in December is now estimated at 52.5%.
The depreciation of the yen also contributed to negative industrial production data from Japan. As reported today the Ministry of economy, trade and industry of Japan, industrial production growth in July to 0.0% after rising in June by 2.3%. Analysts had expected a growth rate of 0.8%. In annual terms, industrial production fell by -3.8 per cent, which is below the previous value of -1.5%.
Industrial production – an indicator that reflects the volume of production plants, factories and mining enterprises of Japan. It attracts attention because it is a key indicator of the strength and health of the manufacturing sector.
Data released today indicates that the decline in growth of industrial production, despite the efforts of Prime Minister Abe to revive the economy.
Also today, the published data on the number of started construction, which in July in annual terms increased 8.9 percent, after a decline of -2.5% in June. This indicator reflects the strength of the Japanese housing market, and also gives an idea about the General state of the economy, as it is very sensitive to changes in the business cycle.
Despite the growing number of started construction, the volume of orders in the construction sector of Japan in July has decreased at an annual rate of -10,9% after declining by 2,4% Jun.
The pound briefly rose against the dollar after the publication of more positive than expected data on consumer confidence UK GfK Group, which in August dropped to -7, while analysts expected a decline to -8. Despite the decrease, the index in August was better value July, when the indicator dropped to -12. Consumer confidence remains weaker than it was before the vote on June 23, when the index was -1.
The consumer confidence index from the GfK Group is a leading indicator reflecting the level of consumer confidence in economic activity. Presented indicator is based on a survey of 2,000 people, conducted from 1-16 August.
The improvement in consumer confidence is affected by high employment and income growth in the UK, as well as the trust contributed to the good weather in recent months.
The Australian dollar strengthened slightly, which to some extent contributed to the data on lending to the private sector of Australia in June. Report Reserve Bank of Australia showed that the amount of funds borrowed by the Australian private sector in June increased by 0.4%, after rising 0.2% in may. In annual terms, this indicator declined by 0.2% and 6.0%. This indicator shows whether the private sector can afford larger expenses, which will support economic growth and is considered a leading indicator of conditions and economic situation in Australia as a whole.
EUR/USD: during the Asian session the pair traded in the range of $1.1135-1.1165
GBP/USD: during the Asian session the pair traded in the range of $1.3065-1.3115
USD/JPY: during the Asian session the pair traded in the range of Y102.85-103.20
At 07:55 GMT Germany will release the unemployment rate subject to seasonal adjustments and the change in the number of unemployed for August. At 09:00 GMT Eurozone will release unemployment rate for July and consumer price index for August. At 12:15 GMT United States will present the changes in the number employed by ADP in August. At 12:30 GMT Canada will release the GDP for June and Q2. In the US at 13:45 GMT will be released the index of purchasing managers in Chicago for August at 14:00 GMT pending home sales for July at 14:30 GMT – the change in oil reserves according to the Ministry of energy. At 23:50 GMT Japan will release the change in the volume of capital expenses for June.