USD rebounds after BoJ intervenes for third suspected day
The US dollar recovered overnight, rebounding from the lows seen after a two- or three-day intervention in FX markets by the Bank of Japan.
The BoJ moved to support the Japanese yen on Thursday and Friday, with suspected further intervention on Monday. However, after touching lows of 155.23, USD/JPY was back at 157.320 this morning.
The stronger US dollar pushed AUD/USD back below 0.7000, with the pair falling 0.3% overnight.
NZD/USD was down 0.1%, pulling back from three-month highs ahead of tomorrow’s employment report at 10.45am NZST.
USD/SGD ended down 0.1% and remained broadly near three-month lows.
Australia manufacturing gains but AUD/USD falls from one-month high
Australia’s manufacturing sector strengthened in July, with the S&P Global Manufacturing PMI rising to 52.0 from 51.5 in June, marking the fastest improvement since January. Hiring activity also accelerated, recording its strongest increase in six months.
Although cost and supply pressures continued to ease, they remained elevated. S&P Global said higher output and stronger new orders provided fresh signs of recovery following weakness linked to the Middle East conflict. However, growth remained modest, suggesting the recovery is still at an early stage.
AUD/USD has pulled back from a one-month high and is now down 3.4% from the recent peak of 0.7278 reached on 6 May. Initial support stands at the 21-day EMA of 0.6988. On the upside, resistance is seen at the 0.7100 level.
China factories cool
China’s RatingDog Manufacturing PMI eased to 50.9 in July, falling short of the 52.0 forecast and down from 51.7 previously. While the reading remained above the 50-point threshold that separates growth from contraction, it pointed to slower momentum in factory activity.
The survey remained stronger than the official Manufacturing PMI, which slipped into contraction territory at 49.2. RatingDog expects factory activity to remain in growth mode in the coming months, although expansion may become more measured. The drop in purchasing activity and continued build-up of input inventories are also worth monitoring.
USD/CNH remains near a three-year low. A move above the 21-day EMA at 6.7703 could pave the way towards the 50-day EMA at 6.7841, while key psychological support is located at 6.7400.
USD rebounds after three-day drop
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 3 – 7 August
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
