Aussie weakens broadly after RBA lowers cash rate by -25bps to new record low of 1.50% today. The central bank maintained that the economy continued to grow "at a lower than average pace". And, "recent data confirm that inflation remains quite low". It also noted that growth in lending for housing purposes has slowed a little. And the "likelihood of lower interest rates exacerbating risks in the housing market has diminished." Thus, the boarded decided to cut interest rate to boost inflation back to target. RBA also reiterated that appreciating exchange rate could complicate the factors assisting the economy and removed the language regarding risks of Brexit.
Also from Australia, trade deficit widened to AUD -3.2b in June, worse than expected of AUD -2.0b. Exports dropped -0.9% yoy while imports dropped -2.3% yoy. But some economists noted that the data was somewhat masked by the volatile iron ore prices. Australia building approvals dropped -2.9% mom in June versus expectation of 0.9% mom. RBNZ inflation expectations rose 1.7% in Q3.
Canadian dollar is one of the weakest major currencies as August starts as it follows oil price lower. WTI crude oil extended the slide from this year's high of 51.67 made in June and breached 40 handle overnight. And that is more than 20% fall in less than two months. Oversupply is seen as a major factor driving oil price down. And the Loonie typically correlates well with oil prices.
CAD/JPY was also dragged down by recent yen strength as BoJ disappointed the markets last week. Current development suggests that rebound from 75.98 has completed at 82.50 already. The three wave structure indicates its a correction. And bearishness is supported by the rejection from the falling 55 days EMA. Retest of 75.98 should be seen next in near term. And there is prospect of revisiting 2001 low at 72.13 in medium term.
Looking ahead, Swiss retail sales and SVME PMI will be released in European session. UK construction PMI and Eurozone PPI will also be featured. US will release personal income and spending later in the day.