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AUD
Fundamental Analysis
(21th Feb): The more risk-on market sentiment is more likely to benefit the commodity currencies including NZD and AUD. The Aussie rallied early in the session to a two-week peak of $0.7207 on strong domestic January employment data. But the currency quickly lost altitude, with traders attributing the slide to interest rate cut forecasts made by Westpac. Reserve Bank of Australia (RBA) Governor Philip Lowe had sent the Aussie tumbling early in February by stepping back from the central bank’s long-standing tightening bias, saying the next move in interest rates could be either down or up. We remain neutral as AUD may see limited buying with interest cut pressure.
(20th Feb): On Tuesday, the market seemed more aggressive in risk-taking than our house view. Both AUD and NZD trade near a two-week high after the US was said to ask the value of the yuan stable as part of trade talks, boosting the outlook for the two nations’ exports. Australia’s hourly wage costs rose 2.3% YoY, the same as in 3Q 2018, which is in line with market’s expectation. Australia’s stable wage growth in 4Q 2018 supports the central bank’s neutral bias, although the economy has seen a slump in hiring and investment and dropping house prices. So now the picture looks mixed, on one hand, the labour market remains resilient; on the other hand, house prices are falling more rapidly, which could put the brakes on spending by consumers and businesses.
According to the RBA minutes from the 5 Feb, consumption was at risk if house prices fall “ much further” and it expected the labour market to remain strong and sees a further decline in the unemployment rate to 4.75% over the next couple of years. So far, the chances of “a interest cut” still lie there. We remain cautiously neutral on the currency.
(19th Feb): Same as NZD, AUD faced selling off on Monday due to the worries over the global automobile industry, which dragged EUR down as well as the Antipodeans. The Australian dollar eased back on Tuesday after the country’s central bank sounded a warning about weakness in the housing market that was taken as dovish for interest rates. The Aussie dipped to US$0.7121 and away from Monday’s top of US$0.7160, which now marks chart resistance. It now has support around US$0.7110 and US$0.7080. We tweaked our view to neutral for AUD as domestic data still indicate a slowdown in GDP and inflation, while the upside news a settlement in US-China trade talk is still in the air.
The dollar fell versus a basket of its peers on Monday as rising expectations of a U.S.-Sino trade deal led investors to shift away
from the safety of the greenback into riskier assets. Both the United States and China reported progress in five days of
negotiations in Beijing last week, although the White House said much work remains to be done to force changes in Chinese
trade behavior.
(18th Feb): Rising expectations of a U.S.-Sino trade deal led investors to shift away from the safety of the greenback into riskier assets including NZD and AUD.
The Aussie found support in US-China trade war positive headlines, which lifted equities, both good signs for the commodity-linked currency. Yet the downside still remains in the latest RBA’s change of stance toward rates, as policymakers now see equal chances of a rate hike than of a rate cut. Softer-than-expected Chinese inflation released at the beginning of Friday sent the pair to a six-week low of 0.7053, from where it recovered to 0.7154 on Monday morning. Tuesday will see some volatility as the RBA is releasing monetary policy meeting minutes.
Technical Analysis
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USD
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Fundamental Analysis
(21th Feb): the market is showing more risk-on since Wednesday with S&P rising in tandem with 30Y treasuries yield, which could further pressure the DXY. Minutes from the January Federal Reserve meeting reiterate the… [/blur][/vc_column_text][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” text_align=”left” background_animation=”none” css_animation=””][vc_column][vc_empty_space height=”35px”][vc_row_inner row_type=”row” type=”full_width” use_row_as_full_screen_section_slide=”no” text_align=”left” css_animation=””][vc_column_inner width=”1/5″][/vc_column_inner][vc_column_inner width=”3/5″][vc_separator type=”normal” color=”#b70909″ border_style=””][/vc_column_inner][vc_column_inner width=”1/5″][/vc_column_inner][/vc_row_inner][vc_empty_space height=”35px”][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” text_align=”left” background_animation=”none” css_animation=””][vc_column width=”1/5″][/vc_column][vc_column width=”3/5″][kswr_heading head_align=”center” head_subtitle_color=”#333333″ head_title=”ACCESS RESTRICTED” head_title_fsize=”font-size:23px;line-height:2;” head_title_fstyle=”font-family:Inherit;font-weight:700;” head_subtitle_fsize=”font-size:17px;line-height:1.5;” head_subtitle_fstyle=”font-family:Inherit;font-weight:inherit;” head_title_margins=”margin-top:0px;margin-bottom:0px;” head_subtitle_margins=”margin-top:0px;margin-bottom:0px;”]Our comprehensive daily reports covers both technical and fundamental analysis, and are customised to your requirements.
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