News Highlights

The dollar regained strength during yesterday sessions despite a weak U.S. existing home sales that showed a decline of 3.8%. The Fed's Beige Book report on economic conditions for July was in line with the June report, noting that housing construction and lending continued to decline. Nonetheless, weak credit conditions in the U.S. is likely to continue to place pressure on the dollar going forward. Look out for U.S. new home sales tonight, which will shed more light on the U.S. housing market.

Australian CPI released yesterday morning was better than expected, a 1.2% q/q increase versus 1% forecast. The release drove the currency up above 0.88 level to a high of 0.8870 from the morning’s low of 0.8789.

The Reserve Bank of New Zealand, as expected hiked rates to 8.25%. However, they indicated that there were done with their hiking frenzy and that a high NZD would be unsustainable. New Zealand trade balance is due later in the day.

In Asia, Japan CPI is due today, continued flat or negative y/y readings on CPI should dampen expectations of an August rate hike. Any yen gains would be capped.