On Tuesday, the Aussie traded retraced earlier weakness in spite disappointing trade and building approvals data and the yen declined on finance minister’s remarks.
AUD/USD traded at 0.7537, down 0.01 percent, while USD/JPY changed hands at 102.67, up 0.24 percent after Japanese Finance Minister Taro Aso stated exchange rates were showing "extremely nervous moves" and that he was closely watching currency movements. In addition,Prime Minister Shinzo Abe's government was slated to approve ¥13.5 trillion ($132 billion) in fiscal stimulus to boost the economy and prices.
In Australia, building approvals for the month of June dropped 2.9 percent, in comparison with a 0.5 percent increase seen MoM and the trade balance broaden to a deficit of A$3.195 billion from an anticipated deficit of A$2 billion and an earlier month figure of A$2.418 billion.
Later, New Zealand releases inflation expectations for the 2nd quarter with the prior figure 1.6 percent QoQ. NZD/USD traded at 0.7172, flat.
Suddenly, on Monday, the dollar held onto gains compared to the other major currencies, even after data indicated that manufacturing activity in the U.S. drop over than expected in July, however, the greenback still stayed within close distance of a five week trough.
The Institute for Supply Management stated its index of manufacturing activity plunged to 52.6 the previous month from June’s 53.2. Analysts had anticipated the index to mark down to 53.0 in July.
The dollar improves from sharp losses announced after the BoJ approved only moderate stimulus measures at the Friday monetary policy meeting, disappointing markets that were expecting for much more forceful easing.
While the Bank of Japan improved its monetary policy more by increasing its purchases of exchange-traded funds, it had chosen not to reduce interest rates deeper into negative territory or upsurge the monetary base, as analysts had broadly expected.
However, sentiment on the dollar stayed fragile following the advance read on 2nd quarter U.S. gross domestic product presented on Friday a 1.2 percent annualized growth rate, well below expectations of 2.6 percent. First quarter gross domestic product (GDP) was reviewed lower to 0.8 percent from 1.1 percent.
The unsatisfactory data reduced expectations for an early interest rate increase from the Federal Reserve.
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