The US dollar is trading firmly, largely within yesterday’s ranges. The odds implied by the September Fed fund futures eased to 36% from 42% before the weekend, but ahead of Fischer’s Bloomberg TV appearance, and tomorrow’s ADP employment estimate, the market seems cautious about fading the dollar’s strength.  

There are several developments to note today. First is the batch of Japanese data. The key takeaway is that the labor market remains tight, with the unemployment rate slipping to 3.0%, the lowest since 1995, and consumption appears to have begun Q3 on a firm note. Employment rose by 200k in July, while unemployment fell 70k. The participation rate slipped to 60.3% from 60.5%. Although both retail sales and overall household spending remain lower than a year ago, both rose in July and by more than expected. Household spending rose 2.5% in July, and retail sales rose 1.4%. 

The market’s focus is on the BOJ meeting later this month and Kuroda’s recent reiteration that monetary policy has not been exhausted. The dollar has already traded on both sides of yesterday’s narrow range against the yen. Yesterday’s high was near JPY102.40, and a close above it would be constructive. Resistance is seen near the month’s high in the JPY102.65-JPY102.85 range. Rising equities today and the firmer US bond yield, (though the 10-year is below the 1.63% level seen at the end of last week), may see the dollar probe higher in early North American turnover.  

Australia reported an 11.3% surge in July building approvals. It is ten-times more than expected, though follows a downward revision to the June series (to -4.7% from -2.9%). It is the strongest report in two years. However, it was not sufficient to lift the Australian dollar. The Aussie encountered fresh selling near $0.7580, just shy of yesterday’s high. Yesterday’s low was seen near $0.7525, which appears safe. Another run at the highs in North America seems likely given the intraday technical readings.