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Sri Lanka's Central Bank Keeps Rates Unchanged



Sri Lanka's central bank decided to leave its key interest rates unchanged on Friday as the outlook for inflation remains benign. The Central Bank of Sri Lanka kept its Standing Deposit Facility Rate unchanged at 6.50 percent and the Standing Lending Facility at 8.00 percent. The bank has kept its key rates unchanged for the seventh straight meeting. The bank last reduced its lending rate by 50 basis points in January and narrowed the rate corridor. Although headline inflation accelerated to 3.6 percent in July from 2.8 percent in June, it continued to remain in low single digit levels, it noted. Supply disturbances triggered by adverse weather conditions could cause temporary price fluctuations, but the outlook for inflation remains benign supported by relatively stable international commodity prices as well as well contained demand pressures and inflation expectations, the bank said. Further, the bank expects real economic growth to remain broadly on target this year and broad money to grow around 13 percent by end-2014, down from the prior estimate of 14 percent. With Sri Lanka's economy staying robust in recent months, there is no urgent need for monetary policy easing to support growth, Krystal Tan, an Asia economist at Capital Economics, said. On balance, if credit growth picks up in the coming months as expected, rates are likely to remain on hold for the rest of the year, the economist said

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RBA Keeps Rates Unchanged



The Reserve Bank of Australia, or RBA, decided on Tuesday to keep its key interest rate unchanged. The monetary policy board decided to maintain the cash rate at 2.5 percent in its August meeting. The same rate has been maintained since August 2013. "Members noted that there was inevitably a significant degree of uncertainty about the outlook, given the number of forces working in different directions." the RBA said in the minutes. Despite recent higher readings, inflation is expected to be in line with the target of 2-3 percent over the next two years, the Board said. The Board assessed that the current monetary policy was appropriately configured and remained accommodative and supportive of demand. The most prudent course is likely to be a period of stability in interest rates, the Board said.


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Australia Leading Index Slows In July - Westpac



The Australian economy remained slightly below trend in July, the latest leading index from Westpac Bank/Melbourne Institute revealed on Wednesday - easing 0.1 percent on month. That follows the 0.1 percent increase in June. "The index continues to indicate that we can expect growth in the Australian economy to stay below trend in the second half of 2014 and into 2015," Westpac said. "We do not expect to see the Reserve Bank changing rates anytime over the next year."

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Australian Dollar Rises Ahead Of Yellen's Jackson Hole Speech





The Australian dollar strengthened against the other major currencies in the Asian session on Friday ahead of Fed Chair Janet Yellen's speech at the economic symposium in Jackson Hole, Wyoming. The two-day Economic Symposium that began on Thursday in the Kansas City Federal Reserve Bank's economic symposium in Jackson Hole, Wyoming, is attended by central bankers, finance ministers, academics, and financial market participants from around the world in the New York session. The meetings are closed to the press but officials usually talk with reporters throughout the day. Comments and speeches from central bankers and other influential officials can create significant market volatility. Yellen will speak on the labor market at the summit. Traders look ahead to the speech for further cues on the monetary policy outlook. European Central Bank's governor Mario Draghi and Bank of Japan's governor Haruhiko Kuroda are also due to deliver some potential market moving headlines. The Asian policymakers are closely monitoring to get some clues from the discussion of setting next week's labor market dynamics from Yellen's speech. Traders are more concerned of any sign of rising global rates will spark a new wave of outflows. The Australian dollar rose to a 14-month high of 96.76 against the yen, from an early low of 96.56. If the aussie extends its uptrend, it is likely to find resistance around the 96.90 area. Against the euro, the aussie rallied to a 1-month high of 1.4248 from an early low of 1.4279. The aussie may test resistance near the 1.41 area. The aussie, which closed yesterday's deals at 0.9301 against the U.S. dollar, firmed to a 3-day high of 0.9318. This may be compared to an early low of 0.9299 against the greenback. On the upside, 0.937 is seen as next resistance level for the aussie. Moving away from an early low of 1.0174 against the Canadian dollar, the aussie advanced to a 2-day high of 1.0193. Continuation of bullish trend may lead the aussie to a resistance around the 1.02 mark. Against the NZ dollar, the aussie edged up to 1.1092 from an early low of 1.1062. At yesterday's close, the aussie was trading at 1.1062 against the kiwi. The aussie is likely to find resistance around the 1.11 area. Looking ahead, Canada CPI for July and retail sales data for June are due to be released in the New York session.




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German Business Climate Data Due On Monday



The results of IfO's survey on German business climate and Spain's producer prices are among the handful of economic data scheduled for release on Monday. At 4 am ET, research institute IfO is due to release the results of its business climate survey for Germany. The business climate index is expected to decrease to 107 in August from 108 in July. The current conditions index is estimated to drop to 112 in August from 112.9 in July. The expectations index is forecast to slide to 102 from 103.4 in July. At 3 am ET, the Czech Statistical Office is scheduled to release its consumer confidence report for August. In July, the consumer confidence index was at -2.3. The business confidence index stood at 10.1 in July and the combined index measuring consumer and business confidence was at 7.6. Around the same time, Spain's national statistical office INE is due to release its producer prices report for July. In June, producer prices had risen 0.4 percent year-over-year and 0.9 percent month-over-month. Statistics Netherlands will release its producer confidence report for August at 3:30 am ET. In July, the producer confidence index stood at 1.2. At 7:30 am ET, the Central Bank of the Republic of Turkey is scheduled to release its capacity utilization data for August. In July, the capacity utilization was at 74.9. The National Bank of Belgium, or BNB, will release its report on business confidence for August at 9 am ET. In July, the business sentiment index based on BNB's survey was at -7.5.

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NZ Dollar Slides After Trade Data



The NZ dollar weakened against the other major currencies in the Asian session on Tuesday as nation's trade data showed a wider-than-expected deficit for April.

Data from the Statistics New Zealand showed that New Zealand saw a merchandise trade deficit of NZ$ 692 million in July. This was wider than the shortfall of NZ$ 475 million expected by economists and followed the NZ$ 247 million surplus in June. Exports were down 3.3 percent, while imports tumbled 4.8 percent.
The NZ dollar fell to nearly a 9-month low of 1.1168 against the Australian dollar and a 6-month low of 0.8310 against the U.S. dollar, from early highs of 1.1137 and 0.8346, respectively and held steady thereafter.
Against the yen and the euro, the kiwi dropped to a 6-day low of 86.49 and a 5-day low of 1.5863, from early highs of 86.85 and 1.5801, respectively and held steady thereafter.
Looking ahead, U.S. durable goods orders for July, house price indexes for June based on two separate surveys by the Federal House Finance Agency and the S&P/Case-Shiller and consumer confidence index for August are due to be released in the New York session.

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South Korea Consumer Confidence Rises In August



An index measuring consumer confidence in South Korea was up in August, the Bank of Korea said on Wednesday, coming in with a score of 107.0 - up from 105.0 in July. Consumer sentiment on current living standards was one point higher than in the previous month at 92, while that for their outlook remained the same at 100. Consumer sentiment regarding current domestic economic conditions was up by six points compared to July, at 81, while that for their future outlook was eight points higher at 100. Consumer sentiments on prospective changes in household income and on expected spending stood at 101 and 109 respectively, unchanged from the month before. The expectation for inflation over the following year was 2.8 percent.

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South Korea Has $7.91 Billion Current Account Surplus



South Korea posted an unadjusted current account surplus of $7.91 billion in July, the Bank of Korea said on Thursday - remaining in the black for the 29th consecutive month. The headline figure is little changed from June's surplus of $7.92 billion. The goods account surplus widened to $6.86 billion, from $6.65 billion in the previous month. The services account deficit narrowed to $0.01 billion from $0.58 billion a month earlier as deficit on the use of intellectual property account improved, the bank said. The primary income account surplus narrowed to $1.49 billion from $2.23 billion in the previous month due to a substantial decrease in income on the equity account. The secondary income account recorded a deficit of $0.43 billion. The financial account recorded a net outflow of $5.92 billion, down from $9.84 billion in June. Direct investment recorded a net outflow of $1.01 billion down from $2.06 billion a month earlier, as residents' outward investment decreased. Portfolio investment recorded a net outflow of $1.74 billion, down from $4.22 billion in June, due primarily to a large net inflow of foreign investors' equity securities investment. Financial derivatives posted a net inflow of $0.50 billion. Other investment shifted to a net outflow of $0.34 billion, from a net inflow of $0.28 billion in the previous month due mostly to increased lending by domestic financial institutions. Reserve assets increased by $3.33 billion. Through the first seven months of 2014, the current account surplus is $47.1 billion.

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UK Consumer Confidence Index Rebounds In August



An index measuring consumer confidence in the United Kingdom climbed back into positive territory in August with a score of +1, GfK said on Friday. That beat expectations for a score of -1 following the -2 reading in July. The August reading matched the nine-year high mark in June. "There is no guarantee how long this stable position will last - a rush of good or bad economic news could set off a marked rise or fall, but things could stay like this for a while," said Nick Moon, managing director of social research at GfK.

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Taiwan Aug Manufacturing PMI Rises At Fastest Rate Since 2011



Taiwan's manufacturing activity grew at the fastest pace in more than three years in August, results of a survey by Markit Economics and HSBC Bank showed Monday. The HSBC Purchasing Managers' Index for the manufacturing sector rose to 56.1 in August from 55.8 in July. This marked the fastest rate of improvement in manufacturing activity since April 2011. A reading above 50 signals expansion in activity. New orders increased at the fastest pace since the start of 2011 in August. The increase in new work supported the sharp rise in manufacturing production, though the rate of increase was slightly slower than in the previous month. This marked the twelfth consecutive month of growth in production. Also, staffing levels improved for the fifteenth straight month in August. The rate of increase was little changed from the 39-month high recorded in July. Input costs inflation eased in August from July's peak. Meanwhile, output prices fell for the seventh consecutive month.

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