It was a good day for the Australian Dollar and the US Dollar, and a less than ideal day for the Japanese Yen and the New Zealand Dollar.
The Australian dollar received a boost after a hotter than expected CPI reading and markets saw a roughly 60% change to the rise at the September meeting and a 74% chance of a rise by November.
The US dollar’s movement was more interesting, and could have received some help from higher Treasury yields. However, in light of the latest batch of data out of the US, I attribute the strength of the US dollar to flows associated with the end of the month and the end of the quarter.
At the bottom of the group was the Japanese Yen, which continued to lose ground throughout the session and forced USDJPY to rise to 4-decade highs. Attention will be focused on possible intervention from Japan.
As for the New Zealand Dollar, we received some negative comments on the economy from the New Zealand Treasury early in yesterday’s Asia-Pacific trading session, but we are not sure if those comments fully explain the amount of weakness or not. The currency has struggled to maintain its momentum following the tougher than expected policy decision we made in May.
This article was written by Arno V Venter at www.forexlive.com.