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Range Trading Continues

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Currencies remain range bound ahead of next week’s significant central bank meetings and employment data. Most major currencies are holding within ranges of approximately half a cent, with USDCAD forming the widest range of 80 pips. With the ECB meeting and Non-Farm Payrolls out next week, some traders are waiting for more data before putting on new positions.

US data was uneventful early in the week, with Core Durable Goods orders slightly disappointing analyst expectations. The figure was expected to grow 0.5% over the month, while the true figure was revealed to be a 0.8% decline over the month. While the Core Durable Goods figure disappointed, the CB Consumer Confidence index did not – beating expectations of 89.1 to increase to 92.4. The data failed to cause a strong reaction for the US Dollar.

Also of note yesterday was the S&P/ Case Shiller Composite 20 House Price Index, which has revealed further slowing in house price growth. The year on year figure was up only 8.1%, less than the 8.2% expected and below last month’s 9.4%. The growth rate of the index has been declining since the start of this year, following the decline in US long term interest rates as well as the onset of the Fed’s reductions to its asset purchase program. US preliminary GDP is due to be released on Thursday, with economists anticipating a growth rate of 3.9%.

Tonight is not expected to be very eventful, with little news of consequence out to shake markets, however tomorrow traders will get a glimpse at Australian Private Capital Expenditure, which is expected to decline by 0.6%, quarter on quarter. Cap-ex in Australia has been trending lower since 2011, as the peak of the mining investment boom was passed and projects moved from the construction and infrastructure phase through to the export and production phase. This changing dynamic has put pressure on capital expenditures in recent times, and government forecasts are for continued pressure on mining cap-ex, with the hope that non-mining investment offsets this.

European data should be worth watching as well, with inflation data from the continent coming initially from Germany tomorrow, with Preliminary CPI expected to show 0% growth from the previous month. On Friday, the Euro wide CPI Flash Estimate is also expected to show low inflation of 0.3%, down from 0.4% last month. While inflation has been low and declining for some time, recent falls in the Euro should begin to stabilise this as import prices such as energy begin to rise.

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