RBA Rate Cut Fears Growing

Orbex Market Flash

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USD Trying to Recover

The US dollar has traded just below flat over the European morning on Tuesday. However, the index is up off the week’s lows, trading 96.41 last. Looking ahead to today, traders are waiting on the release of the ISM Non-Manufacturing reading for December which is forecast to have improved on the prior month.

EZ CPI on Watch

EURUSD has been a little firmer today in light of the weakness in USD. Today’s domestic data focus for EUR traders is eurozone CPI flash for January, expected to have improved to 1.3% from the prior month’s 1% reading. Such an increase would be welcomed by the ECB and would take some pressure off EUR in the near term.

GBP Capped by Resistance

GBPUSD was capped by a test of the 1.32 resistance this morning. Sentiment is still skewed positively towards GBP here ahead of the January 31st Brexit date.

MPs resume the debate on the PM’s Withdrawal Agreement Bill today, expected to last three days. However, in light of the comfortable Conservative majority in parliament, a final passing of the bill is expected. GBPUSD trades 1.3166 last.

SPX Flat

Risk assets have started the day with a subdued tone. The SPX500 trades broadly flat on the day at 3248.63 last. The eruption of fresh tensions between the US and Iran has taken the shine out of the recent US/China trade-deal rally, though the market has recovered a lot of last week’s losses so far.

JPY & Gold Lower

Safe havens have been a little weaker so far at the open today with both JPY and gold down against the dollar. The recovery in equities this week has seen diminished safe-haven flows. XAUUSD trades 1565.86 last, sitting off last week’s 1587.93 highs for now. USDJPY trades 108.46 last, having bounced firmly off the 107.89 level.

Crude Holds Above 60

Oil prices have been a little firmer so far today, posting a minor recovery against the nearly $2 loss posted yesterday. With the prospect of further tension between the US and Iran, risks remain skewed to the upside. Today, traders will get the API inventories report ahead of tomorrow’s headline EIA release. Crude trades 62.87 last, back below the 63.13 level for now.

Loonie Holds At Support

USDCAD is fighting to hold above the 1.2952 support today, trading 1.2972 last. The recovery in USD yesterday has helped stem the decline. However, with oil prices likely to trade higher in the near term, further losses are likely. Canadian employment data on Friday will be the main domestic data focus this week.

AUD Down on RBA Rate Cut Fears

AUDUSD has been under heavy selling pressure again today. The worsening situation regarding the bushfires there is fuelling expectations that the RBA will cut rates when it meets in February in order to help buffer against the economic cost of the fires. AUDUSD trades .6889 last, having broken down below the .6926 support.

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