AUD falls despite RBA keeping rates steady

Feb 02 2016, 1:59 pm

Today’s Economic events

  • Japan monetary base y/y 28.9% vs. 28.3%
  • New Zealand commodity prices m/m -2.30% vs. -1.80% previously
  • RBA leaves cash rate unchanged at 2.0%
  • Swiss retail sales y/y -1.60% vs. -1.30%
  • German unemployment change -20k vs. -7k
  • UK construction PMI 55.0 vs. 57.6
  • Eurozone unemployment rate 10.4% vs. 10.5%
  • Eurozone PPI m/m -0.80% vs. -0.40%

Coming up

  • New Zealand GDT price index
  • US IBD/TIPP Economic optimism
  • FOMC Member George speech
  • New Zealand quarterly employment change
  • New Zealand unemployment rate

The markets opened today on a mixed note after yesterday’s US economic data showed the ISM manufacturing activity posted soft gains, rising to 48.2 from 48 a month before. Despite the modest pickup, the manufacturing index staying below 50 continued to signal weakness in the sector. The Asian markets closed mixed with the Nikkei225 down -0.64% while the Shanghai Composite gains 2.29% for the day. The Yen was trading stronger across the board after showing signs of weakening momentum from last week’s BoJ’s actions. USDJPY is currently down -0.30% for the day, trading near 120.64 at the time of writing. Prices remain weak with today’s price action failing to post higher highs.

[Tweet “The Asian markets closed mixed with the Nikkei225 down -0.64% while the Shanghai Composite gains 2.29% for the day”]

The commodity risk currencies were also under pressure today. Economic events from the Asian session included the RBA’s monetary policy where interest rates were left unchanged at 2.0%. However, the RBA statement dovish than expected with the option for cutting rates still on the table. AUDUSD gave back its gains rather quickly after rising to session highs of 0.7128. At the time of writing, AUDUSD is down -0.84%, trading near 0.705. The Kiwi is also losing ground to the Greenback as NZDUSD is down -0.90% for the day, trading at 0.648 ahead of the Global Dairy Price index data due for release shortly this evening followed by the quarterly labor market data from New Zealand later in the evening.

In Europe, Swiss retail sales fell -1.60% annualized, below estimates of -1.30%, while in Europe, German unemployment change fell -20k, more than the expected -7k declines, marking Germany’s position as Europe’s economic powerhouse. Overall, Eurozone unemployment rate fell to 10.40%. The Euro continued to keep its gains as EURUSD is up 0.36% for the day, trading at 1.092 at the time of writing. European equities are also trading lower. The German DAX is down -1.35% for the day while the London FTSE100 is down -2.03%.

The British Pound, which surged strongly yesterday, was seen trending lower as the Cable fell to hold on to its gains. Prices, however, attempted to test yesterday’s high at 1.444 rather briefly before plunging -0.35% for the day. GBPUSD is currently trading at 1.438 on a weaker construction PMI, which rose to 55, falling below estimates of 57.6.

The NY trading session is relatively quiet with the exception of FOMC Member George’s speech. US IBD/TIPP Economic optimism data is also due for release later in the day.

The commodity markets after trading flat today. Gold prices which posted a monthly high to $1130 were seen easing back to currently trade at -0.14% for the day at $1127 an ounce. Meanwhile, Oil prices continue their decline as WTI futures are trading at $30.71 a barrel, down -3.35% for the day and continuing their declines since yesterday. US equity futures are looking to a weak open today with the Dow Jones futures down -0.76% while the S&P500 is down -0.80%.

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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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