MARKET DEVELOPMENT – RBA’s Lowe Recognises Deteriorating Outlook, AUD Hammered
AUD: While the RBA had seemed to be somewhat upbeat yesterday, RBA Governor Lowe struck a much more cautious tone, which in turn led to a shift from a tightening bias to a neutral bias. Consequently, the AUD had been hammered after the Governor opened the possibility of a cut, while AU bond yields also dipped. However, this should not be too surprising given that the domestic and foreign outlook had been deteriorating for quite some time (particularly China). Naturally key support is seen at 0.7000 and while the US open may see AUD selling pick up, today’s move could be somewhat exhausted, providing a caution for bears looking to chase AUD lower. Eyes on AUDNZD testing 1.04.
EUR: Weak data out of Germany persists with the latest factory orders contracting by 7%. However, while the outlook for the Eurozone remains soft, the Euro has held rather steady with the currency continuing to oscillate around the 1.14 handle. Outlook remains rangebound.
CAD: Canadian Dollar has been on the backfoot amid the drop-in oil prices, consequently taking USDCADtowards the 1.32 handle. Elsewhere, slight jawboning from BoC’s Lane has also pressured the Loonie, whereby the rate-setter noted that a lower currency would help support the Canadian economy during the current period of uncertainty regarding US trade policies.
Economic Calendar: – North American Releases
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