Forex Afternoon Wrap – 20/10

Oct 20, 12:55 pm

Neutral RBA minutes boost Aussie higher

  • RBA releases monetary policy meeting minutes
  • Switzerland trade balance 3.05bn vs. 2.51bn
  • German PPI m/m -0.4% vs. -0.1%
  • MPC member McCafferty Speech
  • BoE Governor Carney Speech
  • Canada Wholesale sales m/m -0.1% vs. 0.2%
  • US Building permits -5.0% vs. 0.0%
  • US Housing starts 6.5% vs. 1.4%

Later

  • FOMC Member Dudley Speech
  • FOMC Member Powell Speech
  • Fed Chair, Janet Yellen Speech

The markets opened today to the RBA’s meeting minutes, which showed that the Australia Central Bank was largely optimistic on the economic trajectory and did not signal any cautious tone for further rate cuts. The minutes were taken as a positive for the Australian dollar which gained 0.47% against the Greenback posting a session high to 0.7295 before easing back lower. The Kiwi dollar has stalled in its rally since the past few weeks and has posted a lower high ahead of the Global dairy trade index results. NZDUSD briefly touched a session high to 0.6846 before heading back lower but remains largely in the green, with gains of 0.28% for the day. The Japanese Yen was weak today with the USDJPY rising 0.23% for the day trading near intraday highs of 119.789, a 3-day high.

The Asian equity markets were mixed as the Nikkei225 was up 0.42% including the Shanghai Composite which gained 1.11% while the Hang Seng lost -0.37% for the day.

The European trading session was relatively quiet as German PPI numbers disappointed, falling -0.4% for the month and posting a decline of -2.1% annualized. The Euro continued to surge unfazed as the single currency notched 0.26% gains for the day after hitting an intraday high to 1.1381 before easing back lower.

The British Pound was largely flat for the day on lack of any clear fundamentals. BoE Members, Carney and McCafferty gave their speeches but nothing strong on monetary policy.

The US trading session saw the release of the housing data which came out mixed. While housing starts posted strong growth, rising 6.5% for the month, building permits decline -5.0%. The US Dollar Index was trading weak losing -0.2% for the day but is showing signs of a rebound off the intraday lows at 94.65.

Canada’s wholesale sales declined by -0.1% below estimates ahead of the BoC monetary policy review due tomorrow. The Canadian dollar was however stronger for the day as USDCAD fell -0.23% after hitting session highs to 1.304. The Canadian dollar had previously eased back against the US Dollar after the election results in the country showed the Liberal Democrat party taking a majority and signaling a new Government.

The remainder of the evening will see speeches from various Federal Reserve members including Fed Chair, Janet Yellen who is due to speak later in the evening at an event in Washington DC. New Zealand Global dairy trade index numbers are also expected to be released later with the previous reading rising 9.9%. The Kiwi got a boost few weeks ago as Standard&Poors ratings agency upgraded Fontera’s outlook to ‘stable’ as dairy prices showed signs of stabilizing. A weak print in the GDT numbers could potentially turn the Kiwi dovish in the near term.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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