RBA decided to remain on hold as it was widely expected by the market and kept its interest rate at +1.50%. The accompanying statement had an upbeat tone with comments for inflation being likely to remain low for some time, a gradual pick up of inflation is expected and it should reach a bit above +2.0% in 2018. The statement also spotted as continuing source of uncertainty the outlook for household consumption. Specifically, it mentioned that household incomes are growing slowly and debt levels are high. EUR/AUD was not influenced by the RBA decision indicative of the neutral effect as the market was expecting the outcome.
- Support: 0.7782(S1), 0.7683(S2), 0.7633(S3)
- Resistance: 0.7900(R1), 0.8000(R2), 0.8050(R3)
US Dollar strengthens as US Stock market plunges
Dow Jones erased all of its 2018 gains in one day as the US stock market plunged in a volatile trading on Monday. The reasons behind the sell-off could be spotted amid concerns about rising bond yields and higher inflation which could have prompted worries of a faster rate hike pace. Friday’s strong employment report strengthened the argument for such a case. The US Dollar gained on buying interest as investors sought its relative safety according to various media reports. It would be indicative that the USD outperformed most of its rivals but the JPY. Overall we expect the USD to continue to strengthen, however, the gains could be somewhat limited.
- Support: 108.30(S1), 106.95(S2), 105.50(S3)
- Resistance: 109.20(R1), 111.05(R2), 112.20(R3)
Today’s other economic highlights:
Germany: Industrial orders for December, Survey:+0.7%mom, Prior:-0.4%mom, 07:00(GMT), positive to EUR.
New Zealand: Milk Auctions, Survey: Prior:3.310 12:00-14:00(GMT), Tentative
US: Trade Balance for December, Survey:-52.0B Prior:-50.5B, 13:30 (GMT), negative for USD.
Canada: Trade Balance for December, Survey:-2.2B Prior:-2.54B, 13:30(GMT), positive for the CAD
Canada: Ivey PMI SA for January, Survey:61.0, Prior: 60.4, 15:00 (GMT), positive for CAD
New Zealand: HLFS Unemployment Rate for Q4, Survey:4.6%, Prior:4.6%, 21.45 (GMT), positive for NZD
Speakers: German BuBa president Weidmann and FOMC member Bullard speak.
All trading involves risk. It is possible to lose all your capital
This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.