BOJ continues easing

The Bank of Japan will continue increasing its monetary base at an annual pace of 50 billion Yen.

The monetary policy statement can be obtained here.

In line with the increase in easing, the Yen continues to weaken sending USD/JPY to test record highs.

GBP/JPY initially dropped during the release of the statement before falling further after 7.15 pm.

Australian trade deficit narrows

The trade balance deficit narrowed to -$1.3 billion, beating estimates of -$1.77 billion and a pleasant improvement from last month`s -$1.56 billion.

The report in depth is available here.

Retail sales met estimates at 0.4%, dropping from 0.6% last month.

Overall this has set a bullish tone for the AUD/USD pair. The additional upwards jump now is due to the weak US data.

Services PMI in UK grows

Services PMI hit 60.5, showing a strong growth in the services sector. It was forecast that the PMI would be 58.6 and recorded a figure of 59.1 last month. 

The GBP/USD pair was relatively bullish prior to the data, and had a significant climb for the next few hours.

On the other hand, GBP/JPY was pretty much uncertain and actually dropped a few minutes after the PMI figures were out. 

Shorting USD/JPY at short term resistance

I shorted USD/JPY at 105.05 which represented my short term resistance level.

In addition, under the currency strength meter, the Yen is the second strongest currency today.

The cabinet reshuffle in Japan today is helping out with the strength of the Yen. Another Yen pair, GBP/JPY fell significantly and was a good short entry.

Australian GDP grows slower than the previous quarter

The second quarter GDP in Australia was 0.5%, beating estimates of a 0.4% growth. This shows signs of slowing growth after the previous quarter ended with a 1.1% growth.

The AUD/USD pair actually dropped initially till around 9.51 am before it climbed at a slow pace.

China non-manufacturing PMI fuels growth

The non-manufacturing PMI was 54.4, higher than the previous period. This was not enough to bring the AUD/USD pair up.

Pound gets beaten while construction growth reaches a 7 month high

The construction PMI rose to 64, bettering estimates of 61.5 and last month`s figure of 62.4.

Surprisingly things have not been kind to the pound. GBP/USD has been seeing a downtrend all day as seen in the M1 chart above.

GBP/JPY started the day with a bullish tone but lost momentum in the afternoon. There was only one green candle as the data was made public and then downwards momentum continued.

I did not maximize my returns from the GBP/USD short I entered. I closed too early before the data not wanting to risk my unrealized gains.

RBA rate statement and cash rate

The cash rate set by the RBA remained at 2.5%, in line with the forecast rate. There is nothing new in the RBA statement, which explains why the AUD/USD pair did not move much. The press statement can be found here.

"An overvalued currency is hampering investments in the country" remarked Mark Barton from Bloomberg. The Australian dollar has been the strongest performing G10 currency so far this year.

 AUD/USD M1 chart above.

AUD/USD M15 chart above.

Generally this pair has been facing a downtrend until 12.06 pm. In the M1 chart, this pair went on to climb slightly till 12.30.

UK manufacturing PMI at a 14 month low

The manufacturing growth in the UK slowed to 52.5, a major miss from the target of 55.1 and last month`s 54.8. Bloomberg states that the key reasons for this contraction is due to the geopolitical risks and weakening demand.

A figure above 50 shows that there is growth in the economy. In this case, the growth momentum is slowing down.

To capitalize on the weakness of the pound, I shorted GBP/USD. This pair should take a few days to give good returns as the USD is not very bullish today. Weirdly, GBP/JPY dropped pre data and then rose in spite of the current economic conditions. The Yen`s weakness is prominent today, with USD/JPY rising not taking into account that it is a bank holiday for US and Canada today.

China manufacturing PMI and HSBC final manufacturing PMI

Both manufacturing PMI and HSBC final manufacturing PMI indicated growth in the economy but highlights an expansion that is slowing down.

The manufacturing PMI at 51.1 fell short of estimates and last month`s figure of 51.7. In addition, the HSBC final manufacturing PMI dropped to 50.2 in comparison to estimates and last month`s figure of 50.3.

Australia is a proxy economy to China and PMI figures would affect its capital markets. The AUD pairs today however did not show its usual volatility.

I entered a short at 0.93339 given how the economy did not expand as much as it should in China.

The M1 graph shows subtle movements.

Here is a close up shot of the M15 graph and price action. The two green candles show an upwards push for this pair. The spinning top like shape shows the opening price starting out low but closing higher, indicating buying interest. 

The red doji hints at uncertainty for a short while before churning up a green candle.