The RBA meets Tuesday, 1 September; although there is a chance of a 25bps rate hike from the current 3.0%, it’s more likely they’ll await further data to confirm the recovery. Fundamentals to date remain encouraging, with 2Q2009 private CAPEX rising 3.3% q/q, 2Q2009 construction work done down only −0.1% q/q, and August DEWR skilled vacancies turning positive at 1.0%. AUD/USD despite the data could not break from the August range, spiking through but not holding gains above resistance at 0.8450, closing at 0.8415.

The second reading of U.S. 2Q2009 GDP remained unchanged at −1.0% annualised, with personal consumption −1.0% and core 2.0%. July personal income was flat m/m, personal spending 0.2%, core 0.1%. August UofM consumer confidence improved to 65.7, August Conference Board to 54.1. July durable goods orders rose 4.9% m/m, ex-transport 0.8%, and new home sales 9.6%, while 22 August initial jobless claims printed 570K. This week the cost of borrowing USD fell beneath that of borrowing JPY, leading to dealer speculation regarding potential changes in carry trade favourites.

The ECB meets Thursday, 3 September, and is widely expected to leave rates unchanged at the current 1.0% despite M3 posting its ninth successive decline to 3.0%, the lowest level since July 1995, and borrowing from the discount window soaring by nearly €1.0Bn. August consumer confidence eased up to −22 and retail PMI fell slightly to 47.1. In Germany, the August  Ifo improved to 95.0 expectations, 90.5 business climate, but only 86.1 current assessment, and CPI printed flat y/y. EUR/USD traded within the lower half of the regression channel entered on 15 June and could not hold gains above long-term resistance at 1.4335, closing at 1.4300.

The U.K. initial reading of 2Q2009 GDP slightly beat expectations, contracting −0.7% q/q, −5.5% y/y, with private consumption printing −0.7%, government spending 0.8%, exports −2.7%, imports −3.2%, and gross fixed capital formation −4.5%. August consumer confidence held at −25 and August Nationwide house prices surged 1.6% m/m as July mortgage lending rose more than expected. Pound sterling developed a bearish trend, as GBP/USD returned to early July levels, closing at 1.6273, and EUR/GBP surged to close at 0.8785.

Canada’s June retail sales rose a solid 1.0% m/m with or without autos. 2Q2009 current account BoP printed an unfortunate record deficit at CA$11.2Bn. USD/CAD followed risk and crude oil, closing at 1.0915. AUD/CAD made a second assault on 0.9200 but fell short, closing at 0.9185.

New Zealand’s July trade deficit narrowed to NZ$163.0Mn and 3Q2009 inflation expectations edged up 2.3% q/q. NZD/USD fought to trend higher but could not reach 0.6900, closing at 0.6847. AUD/NZD bounced from a weekly low of 1.2120, closing at 1.2280.

Japan’s July merchandise trade surplus printed a narrower-than-expected ¥380.2Bn, with exports down −36.5% y/y, imports −40.8%. July unemployment printed a record 5.7%, July household spending a record −2.0% y/y, and July CPI a record −2.2% y/y, core −0.9% y/y. The press notes that many Japanese firms intend to repatriate funds, taking advantage of corporate tax breaks, which could cause strengthening flows up to ¥4Tn in September. August yen ranges continue to hold, with USD/JPY closing at 93.56, EUR/JPY 133.80, and AUD/JPY 78.73.