Week ending 17 July 2009: With corporate earnings surprising mainly to the upside, equities indices surged although commodities prices traded mixed. In a light data week, currency pairs remained within their summer ranges, with one notable exception.

Australia’s June NAB business confidence improved to 4 and conditions to −2, with 2Q2009 import prices falling −6.4% q/q and exports −20.6%. The May Westpac leading index fell −0.2% m/m. AUD/USD rose 2.6% in the week, mainly in the early days on enthusiasm following the Goldman Sachs earnings, and returned to its June range above 0.7880 although it could not hold gains above 0.8040, closing at 0.8016.

U.S. June PPI printed 1.8% m/m, −4.6% y/y, and 3.3% y/y core, with CPI printing 0.7% m/m, −1.4% y/y, and 1.7% y/y core. June advance retail sales rose 0.6% m/m, 0.3% ex-autos, as June industrial production slipped −0.4% m/m, July Empire manufacturing improved to −0.55 from −9.41, and July Philly manufacturing fell to −7.5 from −2.2.

Eurozone June CPI printed 0.2% m/m, −0.1% y/y, and core 1.4% y/y. July ZEW survey of economic sentiment declined to 39.5 in both the Eurozone and Germany. May trade balance narrowed to €1.9Bn and May industrial production rose 0.5%, down −17.0% y/y. EUR/USD rose into the upper half of its current range but could not hold gains above 1.4140, closing at 1.4100.

U.K. June CPI printed 0.3% m/m, 1.8% y/y, core 1.6% y/y, as June jobless claims rose 23.8K, the claimant count held at 4.8% and the ILO unemployment rate rose to 7.6%. May DCLG housing prices improved to −12.5% y/y from −13.0%. GBP/USD trended higher back into its summer range, closing at 1.6341, while EUR/GBP whipsawed above and below the psychologically important 0.8600 level, closing just above at 0.8626.

The BoC meets Tuesday, 21 July 2009, and at previous meetings committed themselves to hold rates at 0.25% until 2010. There is no reason to expect this to change. The BoC 2Q2009 senior loan officer survey showed lending remained tight but is improving. June CPI printed 0.3% m/m, −0.3% y/y, with flat monthly core prices and 1.9% y/y. June leading indicators fell −0.1% m/m. May manufacturing shipments dropped −6.0% m/m, although 2Q2009 business outlook future sales improved to 38.0 from −22.0. USD/CAD provided the week’s only strong trend, falling 4.4% on rumoured merger and acquisition flows, ending the week consolidating and closing at 1.1158. AUD/CAD trended down but remained supported at 0.8920, closing at 0.8944.

New Zealand’s 2Q2009 CPI printed 0.6% q/q, 1.9% y/y, as May retail sales surged 0.8% m/m, 1.6% ex-autos. June PMI improved to 46.2. NZD/USD also moved into the upper portion of its summer range, consolidating and closing at 0.6429.

The BoJ left rates unchanged at 0.10% and revised their economic forecast higher for the third consecutive month. June consumer confidence improved to 38.1 from 36.3, and June machine tool orders to −72.8% y/y. May tertiary industry index fell −0.1% m/m. Asian session traders are advised of a Monday holiday in Japan. USD/JPY fought back from 92.00 to close at 94.34. EUR/JPY and AUD/JPY traded on risk acceptance flows, surging in the early part of the week on Goldman Sachs-inspired euphoria then consolidating later, closing at 133.02 and 75.61, respectively.