Australian dollar coin
A one Australian dollar coin is seen in this picture illustration taken in Sydney, Australia, July 29, 2015. Reuters/David Gray

Australia: It was a quiet night for markets, with Europe and NorthAmerica well into the ‘summer mode’. The AUD lost ground overnightfollowing the release of US GDP data, while domestic releases had littleimpact on the AUD yesterday. Building approvals were much weaker thanmarket expectations in June, posting a significant decline in the month.This was entirely due to a sharp fall in the volatile higher-density housingsegment. The data follows some softer building approvals in recentmonths, however a solid pipeline of housing approvals will supportelevated construction activity for some time yet. The AUD is currentlytrading a touch below 0.73, having re-tested 6 year lows around 0.7255last night. Today there is private sector credit for June released inAustralia, but the main focus will be on Asia with the Japanese CPIrelease (expected to drop yet again) and tomorrow China will be releasingtheir PMI.

Majors: US GDP rose 2.3% q/q, worse than the market expectation of2.5% q/q, but with a higher revision to the previous quarter (from -0.2% to+0.6%) the USD found some support. The composition of growth was alsomore favourable, with household consumption gaining 2.9% following a1.7% rise in Q1 and net exports added 0.1ppts to GDP growth aftersubtracting 1.9ppts in Q1. Initial US jobless claims rose from last week’s42 year low to 267k (270k expected), but numbers still remain historicallylow. The other big story overnight concerns the IMF and Greece;according to a report from the FT, staff at the IMF have told its board thatGreece’s high debt levels and inability of previous Greek governments toimplement reforms precludes it from receiving additional bailout assistancefrom the IMF. While the IMF will continue to participate in bailoutnegotiations, there are question marks over whether it will participate inthe new bailout. The EUR is trading slightly lower this morning. The USreleases the Chicago PMI, which should improve a little in July, but nextweek’s ISM is likely to be more instructive.

Economic Calendar 31 JUL

  • AU PPI QoQ/YoY
  • CA GDP MoM/YoY
  • EC Unemployment Rate
  • UK GfK Consumer Confidence

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