Australian GDP Knocks Aussie to the Ground

Summary of Australian Dollar

In the days that just passed the Australian Dollar strengthened against its main counterparts. It shot to 0.8530 after the official announcement of the Central Bank that it will maintain the interest rate unchanged at 2.5%. The currency was still considered overvalued taking into consideration the drop in commodities prices. Deutsche Bank has recommended RBA to cut its interest rate to 2% in 2015.

Even though the Australian Dollar managed to get some pips in its favor yesterday, the rally was not sustained for a long period. This morning, the GDP was published at 0.3%. This reading is much lower than what analysts and the market were expecting. The Australian GDP was supposed to gain around 0.7%. AUDUSD hit a four years low and is currently trading under 0.84.

The American Dollar is coming back, and it is coming back strong. The dollar has been buoyed by a strengthening labor market recovery. Analysts are expecting 200,000 jobs to be added for the 10^th month in November. Investors will be looking forward to the NFP release, scheduled on Friday.

This morning EURUSD is trading at 1.2370, which is pretty close to the 1.2355 key support level. A break below this support could trigger another rally for the US Dollar, targeting 1.2300 or even lower to 1.2250. USDJPY hit another 7 years high. For this currency pair seems that the sky is the limit. It is currently traded at 119.23 and the closest resistance is at 120 yens per dollar.

The yen has dropped heavily after Moody’s cut of Japan’s credit rating from A1 to A3 because of the uncertainty regarding the fiscal measures that they should take to reduce the deficit of the country. This comes as an additional pressure for Shinzo Abe’s plans.

Gold had a spectacular comeback starting from Monday. At the end of last week it was trading near a multiannual low, around $1140 per ounce. Now it has bounced back to $1200, even though for a short period of time it was traded above this key level.

A very interesting day is expected. The volatility of the market can go above a medium value today.  Spanish, Italian and EU Services PMI are scheduled to be released. UK will publish its Autumn Forecast Statement. United States will be releasing a big number of economic indicators. The ones with the highest impact are: ADP Non-Farm Employment Change, Beige Book and ISM Non-Manufacturing PMI. A couple of FOMC members will have speeches, so the market could react to those events too.

You will find some activity on the currency pairs which includes the Canadian Dollar. The Central Bank of Canada has today its policy meeting and press conference. The interest rate is expected to remain unchanged, but any surprise can trigger a massive move for the Canadian Dollar.