Yesterday saw the RBA leave the cash rate on hold at 1. 5%. The statement noted economic growth is expected to rebound in the December quarter and reach 3% in the coming years.
After a stellar performance by commodities in 2016 and an Aussie dollar which has settled around the 70-76c mark for the time being, plus an improvement to the global economy (most notably US/UK in rates hike mode post stimulus measures), recent poor performing CPI, Retail and GDP figures were overshadowed by the Statements comments on Australia’s expected 3% growth. This saw the AUD/USD initially sell off to 0.7633 then reaching 076812 in the early evening.
For patient traders who were short going into the announcement, today see’s the Aussie weaker around the 0.7630 mark due to a strengthening $US overnight.
US dollar strength came off the back of continued political uncertainty in the Eurozone. Elections in the France, Netherlands, Germany and possibly Italy, and renewed worries about Greece’s debt problems.
No high impact data overnight, however Bank of England Monetary Policy Maker Kristen Forbes suggested a rate hike could be on the way. “If the real economy remains solid and the pickup in the nominal data continues, this could soon suggest an increase in bank rate,” she said. GBP/USD surged to 1.2546 off the back of these comments. Chart Below.
USD/JPY traded through the 112 handle, benefiting from some renewed US dollar strength. The 111.60 level is looking to be good support recently, having bounced from around these levels on the daily twice now.
Gold’s dip to 1,229.3 overnight was well supported, trading up approx. $6, showing continued strength for the precious metal on the back of Eurozone political instability and the Trump Administrations policy uncertainty.
