Week ending 3 July 2009: The forex trading week was abbreviated by the U.S. holiday and traded with subdued volumes, seeing some exaggerated currency movements on renewed risk aversion but much consolidation within continuing ranges.

The RBA meets Tuesday, 7 July, and while a cut is possible they’re widely expected to remain on hold at 3.0%. May retail sales rose 1.0% m/m, while the trade balance shrank to a deficit of AU$556Mn. May private sector credit printed −0.1% m/m, 3.9% y/y, and building approvals are down −22.4% y/y. The June AiG Performance PMIs printed 38.4 manufacturing, 50.2 services, and DEWR skilled vacancies fell −3.7% m/m. AUD/USD traded within its June range of roughly 0.8160 and 0.7800, closing at 0.7975 in the range’s centre.

The U.S. economy lost −467K jobs in June and unemployment rose to 9.5%, as consumer confidence fell to 49.3. June total vehicle sales were a dismal 9.7M units and manufacturing ISM rose to 44.8. May pending home sales rose 0.1% m/m, 4.6% y/y, and factory orders 1.2% m/m.

The ECB held a steady course with rates at 1.0%. May retail sales fell −0.4% m/m, −3.3% y/y, as unemployment rose to 9.5%. May PPI fell −0.2% m/m, −5.8% y/y, and the first estimate of June CPI −0.1% y/y. June economic confidence improved to 73.3, consumer confidence to −25, while PMIs printed 47.5 retail, 42.6 manufacturing, 44.7 services, and 44.6 composite. EUR/USD on Wednesday briefly spiked above resistance at 1.4135 but could not hold its gains and returned to its range, closing at 1.3976. Traders note three consecutive weeks of successively higher lows as the price action rides the 200-MA on four-hour charts, although closing beneath it.

The BoE meets Thursday, 9 July, and is likely to remain on hold with rates at 0.50% and their QE programme unchanged. 1Q2009 GDP was revised down to −2.4% q/q, −4.9% y/y, the largest contraction since 1958. June PMIs printed 47.0 manufacturing, 44.5 construction, and 51.6 services, its second consecutive month over the breakeven 50 level. GBP/USD also spiked through resistance at 1.6660 but fell back into its range above 1.6230, closing at 1.6323, while EUR/GBP bounced from its 200-MA on four-hour charts, dropping back beneath the psychological 0.8600 level to close at 0.8560.

Canada’s April GDP fell −0.1% m/m. USD/CAD traded tightly rangebound between 1.1430 and 1.1640, closing at 1.1616, and AUD/CAD could not force through resistance at 0.9390 and fell to close at 0.9264.

New Zealand’s May trade balance printed a surplus of NZ$858.0Mn, beating market expectations. On 1 July, NZD/USD broke and closed beneath a trendline drawn from 10 March’s low of 0.4911, dropping hard to close at 0.6297. AUD/NZD bounced from last week’s low of 1.2379, rising to close at 1.2657.

Japan’s May retail trade printed flat m/m, −2.8% y/y, while industrial production registered its second consecutive month of 5.9% m/m growth, down −29.5% y/y. June manufacturing PMI improved to 48.2, the Tankan 2Q2009 large manufacturers’ outlook to −30 from −51, but 2Q2009 capex fell −9.4% and the unemployment rate ticked up to 5.2%. USD/JPY traded within the lower third of its current range, closing at 96.08, while AUD/JPY traded subdued and flat on the week, closing at 76.62.