European FX Open - AUD/USD supported above 0.6600 on employment beat

The USD stays on the relative back foot in the wake of yesterday's largely as forecast US CPI report, with EUR/USD opening just north of the psychological 1.1000 mark.

AUD/USD starts the day a couple of points firmer after the overnight release of Australia's employment report for July. The employment change semi-spiked to 58.2k vs the 20.0k consensus, indicating continued resilience in the labour market to elevated RBA interest rates even as the unemployment rate surprisingly ticked up to 4.2%.

USD/YEN though starts the day around 50 points firmer following a big beat in Japan GDP annualised in Q2 of 3.1% q/q and a supportive increase in private consumption, which will be welcomed by the BOJ.

GBP/USD, meanwhile, continues to consolidate in the lower-to-mid 1.28s ahead of the next big release of UK data, with the potential for impact. We get June and Q2 GDP, forecast at 0.0% m/m and 0.6% q/q) as well as IP/MP (both seen small positive m/m) and trade.

In the second half, US retail sales and initial claims lead. The latter are seen rising to 235k amid continued evidence of a slowdown in the US labour market, while sales are forecast to come in at 0.4% m/m in July vs 0.0% the month previous. The Philly Fed and Empire manufacturing are also scheduled.

And, Canada existing home sales are also due.

On the central bank front, the Norges Bank is tipped to prove it is one of he very least dovish G10 central banks around, with the deposit rates expected to be left unchanged at 4.50% today.

Also, Fed's Musalem speaks on the economy and policy this afternoon, with Harker coming after hours.

Meanwhile, a Quinnipiac poll finds Harris leads Trump 48% to 45% in Pennsylvania ahead of the November US presidential election,

Elsewhere, US stock futures all stand materially in the green despite latest China data underwhelming, with IP at 5.1% y/y and retail sales up 2.7% y/y in July as the uneven economic recovery continues.

---- Subscribe to read more ----

To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.