Australian dollar Archives - The Industry Spread

European Markets Bleed amid EU Election Results Announcements, Trade War Update Take Back Bench

May 29, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: AUD/USD, Australian dollar, EU Election, Euro traders, GBP-USD, USD, USD/CAD

USD gains on risk aversion in the market. Trade war influence takes back bench despite Trump’s comments as investors focus on EU election results which hint at great struggle for upper hand in political power play in Europe in near future. This has caused all positive influence from international markets to evaporate resulting in European indices declining sharply.

Summary: US Wall Street yesterday saw major benchmark indices and equities close in green over fresh wave of trade-talk optimism influenced by US President Donald Trump’s comments. However, investors held back from placing any major bets as the update seemed to be repetitive statement coming from US officials recently. Trump Administration continues to maintain its blacklist stance on Chinese telecom giant Huawei Technologies Ltd., which makes it difficult for trade deal to go-through between two nations given China’s stance on US treatment. This suggests that trade deal is unlikely to happen any time in near future no matter, how the officials gloss it over in their statements. Asian markets rode on Wall Street momentum and closed positive but European equities bleed red on Italian budget woes and caution amid EU election results announcements. Muted showings in EU parliamentary elections, talks surrounding Italy’s budget ahead of Fiat-Chrysler- Renault Merger and decline in bank stocks are major factors contributing to bearish activity in European equity market today. Forex market is seeing subdued price action in European market house owing to cautious investor sentiment.

Precious Metals: Precious metals are trading flat in global market owing to mixed cues from major markets across the globe. Risk appetite on Wall Street cues earlier in the day pressured precious metals while cautious investor sentiment in European market is providing precious metal bulls with some level of support resulting in the pair trading range bound/near flat with slight bearish bias.

Crude Oil: Crude Oil is trading with slight positive influence on both major international benchmarks Brent and WTI today. The positive influence is result of support bulls gain from OPEC enforced production and supply cut agreement which combined with escalating tensions in Middle East has managed to provide liquid gold with strong fundamental support regardless of influence from US inventory data.

AUD/USD: The Australian Dollar managed to gain positive momentum today as yet another news driven wave of Sino-U.S. trade optimism. Further, rallying iron ore prices also helped the currency of mining nation gain some strength against its counterpart. While the pair managed to stay above 0.69 handle modest pick-up in USD prevented the Australian Dollar from seeing sharp upside move while they await macro data updates for further trading cues and short term profit opportunities.

On The Lookout: As EU parliamentary election results are announced today, geo-political issues which lack any major progress aside from the usual updates has resulted in trade war headlines taking back bench. Increased political tensions and struggle for upper hand in political power play in Europe and Italian budget woes have taken centre stage today. In UK, while Brexit struggles fume in the background Brexit party has won 9 out of 12 regions which can be taken as an indirect sign that even in case of second referendum people are likely to vote in favor Brexit in which case, a lack of solid agreement between two economies will result in both parties suffering huge loss. Further, Matteo Salvini’s right wing league party won by claiming 34.3% votes and given his position on EU budget limitations committee he is likely to hit back at EU hard over their plans to fine Italy with 3 Billion Euro’s on account of overspending. Given events from recent past, Italy isn’t likely to sit back quietly to EU’s decisions which make it yet another concern for European citizens and Euro traders to watch out for aside from Brexit, Sino-U.S. trade talks and US threat of sanctions on EU’s auto market.

Trading Perspective: While geo-political events and trade war updates may move to back bench they still garner some level of attention and priority from traders across the globe. Despite all the hype in European market today, EU parliament election results are unlikely to have major impact on Wall Street indices performance tonight. Investors now await US CB consumer confidence data and Bank of Japan Governor Kuroda’s speech for short term trading cues and profit opportunities.

US Market: US benchmark index futures trading in the international market saw positive activity in Asian market hours. However, cautious investor tone in European market hours has resulted in futures trading in international market ahead of Wall Street opening take on flat movement with slight bearish bias. Given fresh wave of trade optimism and positive cues from Asian markets, Wall Street is likely to open positive but geo-political event related updates and US traders take on EU Election results will dictate price action for rest of the day.

GBP/USD: The pair is trading with high level of bearish bias as British Pound is facing strong dovish pressure from political uncertainty in the country. Increased likelihood of a hard Brexit outcome is yet another factor pressuring GBP which combined with EU parliamentary elections results and moderate pick-up in favor of US Dollar has resulted in the pair seeing sharp downward price action. Traders now await US CB consumer confidence data for short term profit opportunities and trading cues.

USD/CAD: The pair has been trading with positive bias since trading session began for the day. While lack of trigger favouring USD Bulls and positive crude oil price supported CAD bulls in Asian market hours capping gains, modest pick-up in USD in European market hours on risk averse investor sentiment helped USD gain upper hand. The pair managed to move past mid-1.34 handle ahead of North American market hours supported by USD’s safe haven demand but traders await US macro data update to confirm possibility of prolonged USD’s positive bias and for short term profit opportunities.

European Equities Positive, Further Headlines on Sino-U.S. Trade War Awaited For Fresh Trading Cues

May 15, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: AUD/USD, Australian dollar, CAD, Crude Oil, EUR-USD, European Equities Positive, gold, USD

Despite caution on escalating trade war tensions between China and U.S. optimistic comments from China and US helped improve risk appetite influencing positive activity in European markets.

Summary: Major equities and indices in US Wall Street and Asian markets continue to suffer as trade war intensifies with each passing day. Chinese finance ministry has made an announcement that it plans to impose tariffs ranging from 5% to 25% on various US goods worth nearly 60 billion USD in retaliation against US tariff on Chinese goods. Given the probability that trade war could last for quite a while, analysts have began to calculate impact of import tariffs on permanent basis to see how it would factor into economic growth the year ahead. However, US President Trump has announced that trade talks would continue and there is still chance for trade negotiations succeeding between the nations. This move is viewed by many as a strategic decision from US to avoid initiating a sharp selloff in US government bonds as China holds huge quantity of US bonds and if sell off is used as negotiation tactics or as retaliatory move it could greatly affect the value of US Greenback in the broad market. However, European market is seeing risk on activity as investors hope that trade war could still see positive outcome given the optimistic comments from US & China to extend trade talks as prolonged trade war in negative for all parties involved. In the meanwhile, investors continue to pile up safe haven assets as caution remains prevalent in the global market.

Precious Metals: Gold continues to trade range bound with slight bearish bias as strong dollar influenced by sell-off of major currencies in forex market on risk averse trading activity. Strong Dollar is always a negative factor for Greenback denominated yellow metal however, Silver is seeing some demand in market today resulting in positive rice action.

Crude Oil: Crude oil continues to trade position owing to expectations for possible tightening in global supply over reports of attach on Saudi Arabian oil tankers. Further, reports hinting at both China and US’s willingness to continue trade talks in hopes of resolving the trade wars also added strength to crude oil bulls resulting in today’s positive price action.

AUD/USD: The Australian Dollar continues to remain under pressure as Sino-U.S. trade war continues to escalate with each passing day. However, positive comments from both parties in trade war have helped underpin bulls resulting in the pair trading range bound slightly above multi-month lows. But strong dollar has negated any possibility of the pair seeing upward price action today.

On The Lookout: Sino-U.S. trade war related headlines remains in focus today. So far both parties have expressed willingness to continue trade related negotiations and US President Donald Trump is expected to meet up with Chinese President Xi Jinping next month. However, there is a chance that China could go ahead with retaliatory move of implementing tariffs suggested by Chinese finance ministry. This could do a lot of damage to both US economy and trade war negotiations which is likely to be reflected in market with further sharp slide in value. Proceedings in Brexit have calmed down as upcoming EU elections and ongoing political power struggle in UK remain the main focus of investors. In the meanwhile, traders await macro data updates for short term profit and trading opportunities. US market will see release of import and export price index, API weekly crude oil stock pile data while in Pacific-Asian market hours, will see the release of Wage price index data from Australia and industrial production data from China.

Trading Perspective: US Wall Street is likely to see subdued activity on cautious investor sentiment but positive cues from European market could influence some level of positive price action in intra-day trading activity at early American trading hours.

US Market: Major benchmark index futures trading in the international market saw mixed activity with mostly positive price action ahead of US market hours as optimistic comments from Washington and China on further trade talks. Also risk appetite in investors improved in European markets which suggests US could see some level of positive bias in today’s price action despite caution limiting possibility of gains.

EUR/USD: The pair today fell sharply near 1.1200 and an attempt to scale mid-1.12 handle ended in failure. While EU macro data saw positive outcome earlier today, it failed to have visible impact on price action of the common currency. Traders now await US macro data for short term profit opportunities with strong USD dollar hinting at possibility for further downside move.

USD/CAD: As Crude oil price continues to remain positive since trading session began for the week despite slight weakness at start of the week, Crude oil linked currency Canadian Loonie gains strength to oppose strong USD in the broad market. As mixed signals from global market hurt USD’s rally in the global market, CAD bulls made best of the opportunity resulting in Loonie gaining control of price action. Traders now await US macro data for short term profit opportunities.

Dollar Eases, Long Bets Start to Tire, Euro, Yen Rally

April 9, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Australian dollar, Brexit, CPI inflation, ECB, EUR-USD, Eurozone, FOMC, Sterling, Theresa May, US-China Trade Talks, USD/JPY

Summary: The Dollar eased against most of its Rivals ahead of this week’s ECB policy meeting and FOMC minutes release. Traders pared their long USD bets after the Greenback failed to gain fresh ground following Friday’s mixed US Payrolls report. The Euro, most shorted currency against the Greenback, rallied to near 2-week highs before settling at 1.1260, up 0.44%. This week’s focus is on Wednesday’s ECB meeting where no policy changes are expected. The press conference which follows will be of keen interest. ECB policymakers may touch on the possibility of tiered rates amid weak growth in the Euro region and fears of a global recession. Hours later, the US Fed releases the minutes of its latest FOMC meeting following a key inflation report (CPI). All happening tomorrow!
USD/JPY slipped 0.21% to 111.50 from 111.72 yesterday. Speculative JPY short bets were the second biggest, next to the Euro. The Australian Dollar rallied to 0.7125 from 0.7107, up 0.35%. Sterling rose to 1.3067 from 1.3037 on the back of the generally weaker US Dollar. PM May tries to convince the opposition Labour party to approve her Brexit deal. May has until Friday to bring a deal to the EU for a response.
Wall Street stocks were little-changed. Treasury yields steadied. Benchmark US 10-year yield closed at 2.52% from 2.50% yesterday. No fresh concrete news on China-US trade talks emerged.
Data releases were light yesterday. Japan’s Consumer Confidence slipped to 40.5 from 41.5. Eurozone Sentix Investor Confidence Index beat forecasts. Canadian Housing Starts underwhelmed.

EUR/USD – The Single currency rallied off it’s 1.1200 base to an overnight and near 2-week high at 1.12744 before settling at 1.1260. Total net speculative short bets in the Euro increased to -EUR 99,200 contracts (week ended April 2) from the previous week’s -EUR 80,300. It’s a big increase in shorts, currently at multi-year highs.

Daily FX USD JPY Hourly Chart – 09 April 2019

USD/JPY – the Dollar eased after twice attempting to trade at 112.00 since Friday. USD/JPY traded to 111.74 before easing to 111.50 at the close. The Yen is the second most shorted currency against the Dollar. The 112.00 level will be difficult to break.
AUD/USD – The Australian Dollar benefitted from the overall weaker Greenback, trading to 0.71307 and settling at 0.7125. Many traders remain bearish on the Aussie Battler and the market is short.

On the Lookout: Data releases today are light and mostly 2^nd-tier. Australia reports on its Home Loans for March which are expected to slip 3.0% from the February’s 2.6% fall. Europe starts off with Switzerland’s Jobless rate followed by Italian Retail Sales. The US releases its NFIB Small Business Index as well as JOLTS Job Openings. Job Openings, which exclude the farming industry, are forecast to fall to 7.54 million from 7.58 million. Tomorrow’s the big day with the ECB policy meeting, US Headline and Core inflation reports and the FOMC minutes.

Trading Perspective: Expect the currencies to consolidate their gains against the US Dollar today. US bond yield rises were not matched by their Rivals. This should provide support for the Greenback. The Dollar Index (USD/DXY) closed at 97.062, down 0.32% (97.363 yesterday). The support at 97.00 should hold. Benchmark US 10-year bond yields climbed to 2.52% (2.50%). Germany’s 10-year Bund yield closed flat at 0.00%. Japan’s 10-year JGB yield fell two basis points to -0.06%. Australian 10-year yields slipped 3 basis points to 1.87%.

EUR/USD – While the Euro has rallied off it’s base at 1.1200, the bounce was limited to 1.12744, near two-week highs. Market sentiment is still decidedly bearish on the Euro with many looking for 1.1000 next. While the ECB is not expected to change policy, there is talk about a tiering of rates due to the weak Euro area growth and fears of a global recession. Mario Draghi’s press conference following the ECB’s last meeting saw the Euro plummet from 1.1320 to 1.1175. While the Euro bounced to 1.1420 following the Fed’s dovish bent in its March meeting, it has since grinded lower. Short market positioning remains at an extreme. Look for consolidation with a likely range today of 1.1230-80. Look to buy dips.
USD/JPY – The Dollar failed to break 112.00 against last night with the high at 111.74. Immediate resistance lies at 111.70 followed by 112.00 which is strong. The widening of the gap in the 10-year yields will support USD/JPY today. Immediate support can be found at 111.30 (overnight low 111.280). The next support level is at 111.00. Net JPY shorts had a small increase in the latest CFTC report. The Yen is still the second most shorted currency against the Dollar. Look to sell USD/JPY rallies with a likely range today of 111.25-75.

Investing.Com AUD USD Hourly Chart – 09 April 2019

AUD/USD – The Australian Dollar bounced from overnight lows at 0.70876 to finish at 0.7125 in New York, up 0.35%. An overall weaker Greenback supported the Battler. Emerging Market currencies were mixed. Markets are looking for a breakthrough in the China-US trade talks to lift the Aussie. Yet gains have been fleeting and limited. The main driver for the Aussie will still be the US Dollar. Speculative Aussie shorts are also at extremes. Immediate support can be found at 0.7110 and 0.7080. Immediate resistance can be found at 0.7140 and 0.7170. Look to buy dips with a likely range today of 0.7110-40.

Happy trading all.

Statement by Philip Lowe, Governor: Monetary Policy Decision

March 6, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: AUD, Australian dollar, Australian economy, Australian Labor Market, Inflation, Philip Lowe

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economy grew above trend in 2018, although it slowed in the second half of the year. The slower pace of growth has continued into 2019. The outlook for the global economy remains reasonable, although downside risks have increased. The trade tensions remain a source of uncertainty. In China, the authorities have taken further steps to ease financing conditions, partly in response to slower growth in the economy. Globally, headline inflation rates have moved lower following the earlier decline in oil prices, although core inflation has picked up in a number of economies. In most advanced economies, unemployment rates are low and wages growth has picked up.

Overall, global financial conditions remain accommodative. They have eased recently after tightening around the turn of year. Long-term bond yields have declined, consistent with the subdued outlook for inflation and lower expectations for future policy rates in a number of advanced economies. Also, equity markets have risen, supported by growth in corporate earnings. In Australia, short-term bank funding costs have moderated, although they remain a little higher than a few years ago. The Australian dollar has remained within the narrow range of recent times. While the terms of trade have increased over the past couple of years, they are expected to decline over time.

The Australian labour market remains strong. There has been a significant increase in employment and the unemployment rate is at 5 per cent. A further decline in the unemployment rate to 4¾ per cent is expected over the next couple of years. The vacancy rate is high and there are reports of skills shortages in some areas. The stronger labour market has led to some pick-up in wages growth, which is a welcome development. The improvement in the labour market should see some further lift in wages growth over time, although this is still expected to be a gradual process.

Other indicators suggest growth in the Australian economy slowed over the second half of 2018. The central scenario is still for the Australian economy to grow by around 3 per cent this year. The growth outlook is being supported by rising business investment, higher levels of spending on public infrastructure and increased employment. The main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities. A pick-up in growth in household income is nonetheless expected to support household spending over the next year.

The adjustment in the Sydney and Melbourne housing markets is continuing, after the earlier large run-up in prices. Conditions remain soft in both markets and rent inflation remains low. Credit conditions for some borrowers have tightened a little further over the past year or so. At the same time, the demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased further. Mortgage rates remain low and there is strong competition for borrowers of high credit quality.

Inflation remains low and stable. Underlying inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual and to take a little longer than earlier expected. The central scenario is for underlying inflation to be 2 per cent this year and 2¼ per cent in 2020. Headline inflation is expected to decline in the near term because of lower petrol prices.

The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

Australian Dollar Tumbles in Choppy Trade as China Bans Coal Imports

February 22, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Australian dollar, EUR-USD, RBA, USD/JPY, Westpac

Summary: The Australian Dollar saw a sharp reversal in choppy trade, tumbling 1.25% to 0.7083 (0.7168 yesterday) and finish as worst performer among the Majors. A stellar Australian Employment Gain of 39,100 Jobs (vs forecast gain of 15,100) coupled with a seven-year low 5% Jobless rate initially boosted the Oz to 0.7207. The job gains were in Full-time Employment and the strongest in nearly 2 years. First-up Westpac economist Bill Evans (a perennial Aussie bear) forecast that the RBA could cut rates twice this year. The big hit came from reports that China’s Dalian port would ban all Australian Coal imports. AUD/USD tumbled to 0.70703 lows before settling at 0.7083. The Kiwi also slumped 0.8% to 0.6805.
The US Dollar managed modest gains despite weaker-than-expected Durable Goods Orders, Existing Home Sales and Philly Fed Manufacturing Index. The Euro finished modestly lower in light trade. Euro area Composite PMI’s were mostly up, primarily driven by the Services sector. The Dollar Index (USD/DXY) was up 0.11% to 96.612 from 96.491 yesterday.

Business Insider Australia Unemployment Rate and Employment Chart – 22 February 2019

AUD/USD – initially rallied on the robust Employment data to 0.7207 before Westpac issued its call of an RBA rate cut. AUD/USD then slipped back to 0.7160/70 where it first started from. The Aussie then took a big hit from the report of China’s ban on Australian Coal Imports. AUD/USD slumped 1 cent to 0.7070 from 0.7170 before settling at 0.7085. Australia’s Minister for Resources Josh Fridenberg said that Australian exports to China would remain strong.
EUR/USD – stuck to a familiar tight range in light, features trade between 1.1322 to 1.1366. The Euro closed little-changed at 1.1338 from 1.1345 yesterday.
USD/JPY – also stuck in a relatively tight range between 110.567 and 110.862. The Dollar closed at 110.70. The US Ten Year bond yield was up to 2.69% from 2.65%.

On the Lookout: Apart from the Australian Dollar, trading in the rest of the Majors was light. The US Dollar managed to claw back initial losses from the weaker-than-expected Durable Goods and Existing Home Sales data. Traders are searching for the next catalyst to shake things up.
The Aussie was slammed by the Chinese announcement on imports of Australian Coal into its Dalian Port. Dalian handles the equivalent of around 2% of Australia’s coal exports. Prior to that, Westpac Chief Economist Bill Evans revised down their GDP forecasts, lifted the Unemployment rate and gave their expectations of up to two RBA rate cuts this year.
RBA Governor Philip Lowe delivers his semi-annual testimony to the House of Representatives Standing Committee on Economics at 9.30 am Sydney time. No doubt Lowe will talk on policy, the economy and other issues.
Today sees German IFO Business Climate, Eurozone Q4 2018 Final Headline and Core CPI, and Canadian Headline and Core Retail Sales. FOMC Members Williams, Clarida and Quarles are all speaking at a US Monetary Policy Forum in New York (4-5.30 am Saturday 23 Feb Sydney time).

Trading Perspective: The Dollar managed to claw back modest gains despite weaker-than-expected data. US Existing Home Sales fell to 3-year lows while Philadelphia’s Fed Manufacturing Index dropped to -4.1 from 17 in January. This was the first negative reading since May 2016. Wall Street stocks pared back their losses to end 0.5% down. Traders continue to digest reports on the US-China trade negotiations. This may well be where the first drivers to shake the markets may come from.
The Australian Dollar once again looks soft at the lower end of it’s trading range. According to Callam Pickering, APAC Economist for the global jobsite Indeed, “The RBA will not cut rates if momentum in the labour market persists.”

Daily FX.COM – AUD USD 1H Chart – 22 Feb 2019

AUD/USD – From my trading experience, the Aussie always looks weakest when it’s near its lowest point. While Wages are still soggy, employment remains strong. Any positive development on the US-China trade talks could see a big turnaround on the Aussie. While the momentum is currently on the downside, we should see some good buying support near its lows. The US Dollar may still have room to correct downwards and this is supportive for the Battler. AUD/USD has immediate support at 0.7060/70 followed by 0.7030. Immediate resistance can be found at 0.7110 and 0.7140. Look to buy dips near the 0.7060 level.
EUR/USD – The Euro looks likely to extend its sideways trading between 1.1320 and 1.1370 today with perhaps slightly more downside in the short-term. EUR/USD has immediate support at 1.1320 followed by 1.1300. Immediate resistance can be found at 1.1370 and 1.1400. Look to trade a likely range of 1.1310-1.1360.
USD/JPY – The Dollar should find support today at 110.50 given the higher level of US 10-year yields. Topside resistance can be found at 110.90 and 111.00 which should cap on the day. Trade negotiations between the US and China will still be the main driver of this currency pair. With yesterday’s US call on stability for China’s Yuan in their trade talks, the Yen may be an issue when Japan and the US meet on their trade. Look to sell USD/JPY rallies to 111.00.
GBP/USD – Sterling slipped against the Dollar to finish at 1.3035 from 1.3060 yesterday. While talks between British PM May and EC President Juncker yesterday were described as “constructive”, traders remain sceptical. GBP/USD has immediate support at 1.3020 and then 1.3000. Immediate resistance lies at 1.3100. Look to trade between 1.3000/60 today.

Happy Friday and trading all.

Equities Trade in Green While Forex Trades Mixed on Wall Street Cues

February 13, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: Australian dollar, equities, EUR-USD, Forex Trades, GBP-USD, silver, stocks, Wall Street

Headlines driven momentum on border wall deal which drove price action in Wall Street inspired positive action in global equities, but Dollar’s strength capped gains in Forex market.

Summary: Prevalent risk appetite in broad market helped equities trade positive but the cause for increased risk appetite happens to also support US Dollar in broad market resulting in mixed outcome in Forex markets. All major indices and stocks traded positive in major Asian and European markets. While investors are still cautious of Sino-U.S. trade talk outcome as deal is unlikely to be finalized until Presidents of both countries meet face to face later this month, optimism surrounding trade talks on expectations for positive outcome during upcoming trade talks scheduled to occur later this week underpins market bulls. Further news that U.S. lawmakers have managed to come up with a deal regarding funding for border wall between U.S. & Mexico has further improved positive sentiment in market as U.S. government is unlikely to go through with another shutdown which added positive influence to U.S. Dollar in global market which is already trading positive supported by upbeat U.S. T.Yields.

Precious Metals: Gold and Silver continue to trade positive as investors are cautious owing to uncertainties surrounding Brexit proceedings ahead of upcoming UK Parliament meeting and concerns of slowdown in Euro area economic activity which has caused spread widening between German and other major long term government bond. This has created steady demand for safe haven assets keeping precious metals steady above critical price levels.

USD/JPY: The price action of pair continues to remain influenced by strong US Greenback in broad market. Improved risk appetite on positive cues from U.S. Wall Street and headlines driven momentum further decreased demand for Japanese yen which is viewed as safe haven asset and this has helped the pair hit new 2019 high earlier today. The pair is now consolidating its hold over today’s highs having fallen slightly lower from intra-day highs on profit booking activity.

AUD/USD: Australian Dollar today staged steady upside price action following yesterday’ sharp decline when price hit one week lows. AUD bulls were supported by optimism surrounding upcoming Sino-U.S trade talks. Further healthy risk appetite in broad market also helped underpin demand for AUD in broad market. The pair faces strong resistance to upside at 0.7100 and support to downside at 0.7050 handle and is trading at 0.709 handle.

On The Lookout: Immediate focus of investors is now on upcoming Sino-U.S. trade deal and UK parliament session. UK parliament is set to meet later this week to discuss Brexit proceedings but given E.U’s refusal to budge to UK’s demands the situation is in stalemate and the outcome of meeting is likely to give investors an idea on whether there will be extension of deadline with soft Brexit or no deal Brexit scenario which will dictate overall price action for most major assets for rest of the month. On the release front, U.S, markets will see release of JOLTS job openings and a speech by Fed chair Jerome Powell which is expected to affect USD price action in broad market and set short term course for rest of the week.

Trading Perspective: Given increased risk appetite in broad market and positive headlines driven momentum are expected to keep Wall Street trading in green today.

EUR/USD: The pair hit fresh 2019 lows in the 1.1260/55 in early trading session but managed to recover on improved risk appetite in broad market. Optimism surrounding Sino-U.S. talks underpin EURO bulls in immediate market but the pair needs to breach resistance near 1.1310/1.1315 for EURO to regain upper hand while price action below said level will lead to USD regaining control of momentum shortly.

GBP/USD: A modest USD pull-back helped ease bearish pressure and bounce up from from intra-day lows. Yesterday’s speech by BOE Governor Mark Carney didn’t have much impact on price action. Investors now look to Fed Chair Jerome Powell’s speech for meaningful short term profit opportunities while they await updates from UK parliament meeting scheduled to occur later this week.

USD/CAD: The pair saw steady downside price action today, but there wasn’t much decline in price value as price action still remains well above 1.32 handle. While modest USD pull-back could be viewed as one of the reasons for downside action, the major reason was Crude oil price’s sharp upside move on news that Keystone pipeline bringing Crude oil from Steele City, Nebraska, to Patoka, Illinois was closed following the discovery of a leak in the St. Louis, Missouri. The pair is likely to move range bound for rest of the day but strong USD in broad market is likely to resume control of price action once crude oil price rally calms down.

Global Markets Trade in Red On Caution Over Chinese Trade Data & UK Brexit Vote

January 15, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: Australian dollar, Chinese Trade Data, EUR-USD, forex markets, global economies, global equity, risk appetite, risk averse, trade war, USD/JPY, XAU/USD

Disappointing Chinese macro data influenced global equity and forex markets on dovish price action which is expected to continue until tomorrow’s Brexit vote is concluded.

Summary: Asian market today opened on positive note following a week that saw significant boost in risk on trading environment over positive headlines on Sino-U.S. trade talk progress. However the positive action soon lost momentum and risk appetite died down in market following release of disappointing Chinese trade data. Import and export data in China saw biggest drop in two years for readings on monthly basis. This caused investors to turn cautious owing to significant impact it had on both Chinese and global economies as another trade war between the two parties could drag down global economies even future and no details regarding the recent talks has hit headlines despite comments from last week hinting at progress. This combined with tomorrow’s key even – UK Parliament’s vote on Prime Minister Theresa May’s Brexit plan which has great impact on Euro area business growth and economic activity has caused investors to book profit on recent gains and takes cautious stance which greatly limits any major change in market price action. This has now caused all risk assets in Asian and European markets and major forex pairs to trade in red.

XAU/USD: Today’s risk averse trading activity in forex and equity markets following disappointing trade data from China has boosted demand for gold as a safe haven asset. As investors cautiously await further details on Sino-U.S. trade talks and tomorrow’s key Brexit vote, demand is high in physical and online markets for gold owing to safe haven demand and cheaper exchange rate which makes it a good time for traders from emerging markets to participate in gold trading. Gold which was already trading positive last week despite risk on trading activity is expected continue seeing gains this week as safe haven demand remains relatively high in immediate and near future.

AUD/USD: Australian Dollar opened dovish for the week resuming its bearish price action from Friday’s close owing to profit booking activity which had erased most of the gains made earlier that day. This dovish influence on AUD was further aggravated post disappointing trade data in China owing to close trade ties between them and bearish cues from Chinese market dragged the currency to fresh intra-day lows of 0.7172 but weak US dollar in broad market helped AUD recover significantly from early losses and by mid European market hours was trading at 0.719. The pair is now expected to move range bound owing to lack of solid breakout trigger on either side of the pair.

USD/JPY: Following high level of bearish price action in various major markets across globe and a relatively weak USD on dovish Fed comments and partial shutdown in US government, risk off trading activity has been high since Thursday and this has provided some level of support to JPY which is considered a safe haven forex pair. The bearish sentiment in broad market spiked today following weak Chinese macro data which inspired fresh wave of caution among investors. This combined with tomorrow’s Brexit vote has resulted in wave of demand for safe haven assets today and this helped JPY gain significant ground against USD and the pair is currently trading at $108.01 down by 0.48% on the day as of writing this article.

On The Lookout: Investors are now on lookout for Brexit Vote in UK parliament which is key event of the week. While the outcome forecast is negative, Brexit uncertainties for once have boosted Pound as traders hope possible extension in article 50. Traders are also on lookout for no-confidence vote on PM May and these two will have major impact on Euro area political and economic proceedings in near future which makes them center of investors focus. Investors also wait retail sales and inflation data from UK and US markets later this week which will provide plenty of short term opportunities for traders.

Trading Perspective: Given risk averse trading activity in broad market US dollar is expected to gain across the board despite short to medium term outlook remaining dovish for Greenback. However any major move is highly unlikely ahead of tomorrow’s Brexit vote.

EUR/USD: Euro dropped sharply during Asian market hours following dovish cues from China. This decline was further aggravated owing to disappointing Industrial Production data for Euro area. The ongoing trade war is taking its toll on all major markets but Euro is also suffering from internal political conflicts which are adding pressure to single currency. And one such key political event UK parliament vote on Brexit deal will take place tomorrow which has caused the pair to decline heavily. But downside is prevented thanks to broad based USD weakness. The pair will continue range bound action ahead of tomorrow’s Brexit headlines owing to lack of solid breakout trigger on either side of the pair

GBP/USD: For once, uncertainty surrounding Brexit has favored British pound as headlines hint at possible extension of Brexit deadline. This has caused GBP to gain significantly despite broad based risk averse trading activity. While Pound could lose some ground if the vote doesn’t turn out in favor of Brexit deal, PM May is highly likely to win no-confidence vote against her which should provide GBP bulls to maintain some level of gains across majority of the week. For now the pair trades at 1.2876 up by 0.26% on the day, but a negative outcome tomorrow could force the pair back near mid 1.27 handle.

USD/CAD: Canadian Dollar continues to lose its ground against US Greenback as profit booking activity and risk averse trading in broad market is boosting Dollar to certain extent. Further disappointing Chinese macro data added pressure to crude oil price in broad market which enjoyed some gains last week on positive Sino-U.S. trade talk related headlines. Being a commodity linked currency, a decline in crude oil weighs on Canadian Loonie and as Oil will continue to lose price while risk averse trading boosts USD in immediate and near future trading session US Greenback is likely to move back above 1.33 handle by in next 24 hours.

Statement by Philip Lowe, RBA Governor: Monetary Policy Decision 7 August 2018

August 8, 2018 by industryspread Leave a Comment Filed Under: Central Bank Annoucements Tagged: Australian dollar, Australian economy, cash rate, economies, economy, Financial Sector, investors, labour markets, money-market, mortgage rates, Philip Lowe, Reserve Bank of Australia

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economic expansion is continuing. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.

Financial conditions remain expansionary, although they are gradually becoming less so in some countries. There has been a broad-based appreciation of the US dollar over recent months. In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined somewhat since the end of June. These higher money-market rates have not fed through into higher interest rates on retail deposits. Some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago.

The Bank’s central forecast for the Australian economy remains unchanged. GDP growth is expected to average a bit above 3 per cent in 2018 and 2019. This should see some further reduction in spare capacity. Business conditions are positive and non-mining business investment is continuing to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.

Australia’s terms of trade have increased over the past couple of years due to rises in some commodity prices. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years.

The outlook for the labour market remains positive. The vacancy rate is high and other forward-looking indicators continue to point to solid growth in employment. Employment growth continues to be faster than growth in the working-age population. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 per cent. Wages growth remains low. This is likely to continue for a while yet, although the improvement in the economy should see some lift in wages growth over time. Consistent with this, the rate of wages growth appears to have troughed and there are increased reports of skills shortages in some areas.

The latest inflation data were in line with the Bank’s expectations. Over the past year, the CPI increased by 2.1 per cent, and in underlying terms, inflation was close to 2 per cent. The central forecast is for inflation to be higher in 2019 and 2020 than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in headline inflation in 2018 being a little lower than earlier expected, at 1¾ per cent.

Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA’s earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality.

Statement by Philip Lowe, Governor: Monetary Policy Decision

August 5, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Australian dollar, labour force participation, Monetary Policy Decision, Philip Lowe, RBA, Reserve Bank of Australia, wages growth

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economic expansion is continuing. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. The Chinese economy continues to grow solidly, with the authorities paying increased attention to the risks in the financial sector and the sustainability of growth. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One uncertainty regarding the global outlook stems from the direction of international trade policy in the United States. There have also been strains in a few emerging market economies, largely for country-specific reasons.

Financial conditions remain expansionary, although they are gradually becoming less so in some countries. There has been a broad-based appreciation of the US dollar. In Australia, short-term wholesale interest rates have increased over recent months. This is partly due to developments in the United States, but there are other factors at work as well. It remains to be seen the extent to which these factors persist.

The recent data on the Australian economy continue to be consistent with the Bank’s central forecast for GDP growth to average a bit above 3 per cent in 2018 and 2019. GDP grew strongly in the March quarter, with the economy expanding by 3.1 per cent over the year. Business conditions are positive and non-mining business investment is continuing to increase. Higher levels of public infrastructure investment are also supporting the economy. One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high.

Higher commodity prices have provided a boost to national income recently. Australia’s terms of trade are, however, expected to decline over the next few years, but remain at a relatively high level. The Australian dollar has depreciated a little, but remains within the range that it has been in over the past two years.

The outlook for the labour market remains positive. Strong growth in employment has been accompanied by a

Philip Lowe RBA Governor and Chair

significant rise in labour force participation. The vacancy rate is high and other forward-looking indicators continue to point to solid growth in employment. A gradual decline in the unemployment rate is expected, after being steady at around 5½ per cent for much of the past year. Wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time. Consistent with this, the rate of wages growth appears to have troughed and there are increasing reports of skills shortages in some areas.

Inflation is low and is likely to remain so for some time, reflecting low growth in labour costs and strong competition in retailing. A gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for CPI inflation to be a bit above 2 per cent in 2018.

Nationwide measures of housing prices are little changed over the past six months. Conditions in the Sydney and Melbourne housing markets have eased, with prices declining in both markets. Housing credit growth has declined, with investor demand having slowed noticeably. Lending standards are tighter than they were a few years ago, with APRA’s supervisory measures helping to contain the build-up of risk in household balance sheets. Some further tightening of lending standards by banks is possible, although the average mortgage interest rate on outstanding loans has been declining for some time.

Statement by Philip Lowe, RBA Governor: Monetary Policy Decision

June 6, 2018 by industryspread Leave a Comment Filed Under: Central Bank Annoucements Tagged: Australian dollar, Australian economy, central banks, Chinese economy, economy, Financial markets, Financial Sector, labour markets, Monetary Policy Decision, money markets

Date 5 June 2018

Philip Lowe, Governor and Chair

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economy has strengthened over the past year. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. The Chinese economy continues to grow solidly, with the authorities paying increased attention to the risks in the financial sector and the sustainability of growth. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. As conditions have improved in the global economy, a number of central banks have withdrawn some monetary stimulus and further steps in this direction are expected.

Financial markets have been affected by political developments in the eurozone, particularly in Italy. There are also concerns about the direction of international trade policy in the United States and economic developments in a few emerging market economies. Long-term bond yields in most major economies have declined recently and there has been some widening of corporate credit spreads. Overall, though, financial conditions remain expansionary. Conditions in US dollar short-term money markets have eased recently, although they are tighter than earlier in the year, with US dollar short-term interest rates having increased for reasons other than the increase in the federal funds rate. The higher rates in the United States have flowed through to higher short-term interest rates in a few other countries, including Australia.

The price of oil has increased over recent months, as have the prices of some base metals. Australia’s terms of trade are expected to decline over the next few years, but remain at a relatively high level.

The recent data on the Australian economy have been consistent with the Bank’s central forecast for GDP growth to pick up, to average a bit above 3 per cent in 2018 and 2019. Business conditions are positive and non-mining business investment is increasing. Higher levels of public infrastructure investment are also supporting the economy. Stronger growth in exports is expected. One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high.

Employment has grown strongly over the past year, although growth has slowed over recent months. The strong growth in employment has been accompanied by a significant rise in labour force participation, particularly by women and older Australians. The unemployment rate has been little changed at around 5½ per cent for much of the past year. The various forward-looking indicators continue to point to solid growth in employment in the period ahead, with a gradual reduction in the unemployment rate expected. Wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time. Consistent with this, the rate of wages growth appears to have troughed and there are reports that some employers are finding it more difficult to hire workers with the necessary skills.

The Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

The housing markets in Sydney and Melbourne have slowed. Nationwide measures of housing prices are little changed over the past six months, with prices having recorded falls in some areas. Housing credit growth has slowed over the past year, especially to investors. APRA’s supervisory measures and tighter credit standards have been helpful in containing the build-up of risk in household balance sheets, although the level of household debt remains high. While there may be some further tightening of lending standards, the average mortgage interest rate on outstanding loans is continuing to decline.

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