Daily Outlook

Today the main focus will be on the RBA’s interest rate decision at 2:30pm. As the cash rate is expected to remain the same, investors are keeping an eye on the Stevens’ commentary that could address the current economic conditions and whether RBA is concerned about the higher level of AUD.The AUD has experienced significant strength this year, having risen from 0.6826 in early January to its March high of 0.7722. A recovery in commodity prices, improvement in risk-sentiment and USD weakness have all contributed to the rise. Despite analyst expectations of the AUD pushing as high as 0.80, upward momentum is faltering as the AUD currently trades at the 0.76 level, coming off weaker retail sales yesterday. further strengthening in the currency would require a combination of improving commodity prices, growing risk appetite and increasing RBA rate expectations. As downside risks for USD are limited at current levels due to recent dovish rhetoric from the Fed, there is scope for further Australian dollar weakness.

Oil continue to fall as hope for a production freeze fades ahead of the Doha meeting. Oil has closed at its lowest level in a month as WTI and Brent push $35.42/bbl and $37.48/bbl at time of writing. Skepticism is mounting ahead of the meeting between major OPEC and non-OPEC oil producing states, especially after Saudi Arabia’s comments about any possible output freeze. As inventories and production continue to swell, pressure is increasing for producers to reach an agreement.

Gold has suffered steep losses despite a weak USD, as fund managers and traders shifted more assets to the stock market. Following NFP, Gold dropped from $1230 to $1209 before stabilizing at $1216.