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Forex - Japanese yen retraces earlier weakness after CGPI

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Investing.com -

Investing.com - The Japanese yen slightly retraced earlier weakness on Tuesday following capital good price index data.

USD/JPY traded at 102.23, up 0.03%, and AUD/USD weakened to 0.9262, down 0.01%, ahead of house data and a bank survey.

Japan's capital good price index rose 4.3% year-on-year in July, below the expected gain of 4.4%, but still the 16th straight increase.

In Australia, the NAB's July business confidence and business conditions are due at 1130 Sydney (0130 GMT), the same time as the second quarter house price index. Conditions are expected to improve from plus 2 in June. Business confidence, on the other hand, is expected to remain steady around plus 8.

The house price index is expected to show a 1.1% gain quarter-on-quarter.

Overnight, the dollar traded higher against most major currencies after military tensions in Ukraine, Gaza and Iraq subsided, allaying concerns that geopolitical events could threaten U.S. recovery.

Reports that Russia has ended the military exercises it was conducting near the Ukraine border gave the dollar room to rise on Monday in a session void of major market-moving indicators.

Russian President Vladimir Putin said Moscow is working with the International Red Cross to send humanitarian aid to Ukraine, which also gave the greenback support.

Meanwhile in the Middle East, a 72-hour ceasefire between Israel and Hamas in Gaza took effect on Sunday, which gave the dollar further room to rise by allaying concerns that geopolitical tensions will dampen global growth and possibly prompt the Federal Reserve to spend more time analyzing the economy before raising interest rates.

A U.S. decision to launch airstrikes in Iraq to halt a Sunni insurgency also gave the greenback support, as fears that the country was on the edge of chaos ebbed on Monday as well.

Separately, the euro came under pressure due to ongoing expectations that monetary policy will tighten in the U.S., U.K. at a time while the European Central Bank may decide to loosen policy further to steer the euro area away from deflationary decline.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.01% at 81.52.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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