Forex Crunch Aussie Rate Decision Larger Impact on Markets |
- Aussie Rate Decision Larger Impact on Markets
- Forex Daily Outlook – February 2nd 2010
- Forex TV Weekly Outlook
| Aussie Rate Decision Larger Impact on Markets Posted: 02 Feb 2010 12:13 AM PST
The decision to leave Australian’s interest rates unchanged left the Aussie vulnerable and hurt. A look at the decision, the impact for the Aussie and the larger impact for other currencies as the Non-Farm Payrolls are coming. The decision Although it wasn’t totally unexpected, the decision to leave the Australian Cash Rate at 3.75% and raising the rates to 4% was a blow to the Aussie. The instant reaction in AUD/USD was a fall of almost 150 pips -from 0.8927 to 0.8781. Doubts about the rate hike existed all along the way. Q3 GDP was weaker than expected, and China’s tightening measures were felt instantly in Australia. On the other hand, most economic indicators are good, especially the important employment figures, which posted a neat surprise last month. The last rate-related figure was Australian consumer price index. Q4 CPI rose by 0.5%, slightly better than expected, and giving the notion that a rate hike was secure. But nothing is certain in forex, and Glenn Stevens decided to let the economy continue growing before fighting inflation, which it sees as controlled:
The RBA hinted that it will be ready to raise the rates again, but not now. AUD/USD technicals Currently just under 0.88, the fall has currently stopped. The next support line for AUD/USD is 0.8735, which was December’s low. There’s still room to go down. Further below, 0.8567 was a support line for the Aussie on its way up. If American Non-Farm Payrolls are stellar, the Aussie could go further down under: the area of 0.85 is very important for the pair. AUD/USD struggled to break 0.8477 on its way up, and took a rest at 0.8520 before continuing the journey. Looking up, 0.8950 remains the immediate and major resistance line. Read more about the technical lines in the AUD/USD forecast. Larger impact and Non-Farm Payrolls But maybe US Non-Farm Payrolls and other indicators won’t be that good. Maybe the recovery is more fragile than anticipated earlier. The strongest Western economy, Australia, has doubts about the recovery. This could lead to more dollar gains, but for different reasons: risk aversion. Since the Non-Farm Payrolls release on December 4th, the forex market went back to normal, with the risk factor being out of the equation. Is this trend reversing? Now that Australia isn’t pushing forward, there can be more risk aversive behavior elsewhere, with the dollar gaining on fear. Another currency that benefits from this is the Japanese Yen, another “safe haven” currency that enjoys fear. The dollar-yen correlation might sneak back. American Q4 Advance GDP was good, but the markets hesitated at first. Roubini dismissed it as dismal. A strong, positive and convincing Non-Farm Payrolls release is needed to depress the risk factor. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.       |
| Forex Daily Outlook – February 2nd 2010 Posted: 01 Feb 2010 02:00 PM PST
The greenback took a break from rises yesterday, on risk appetite trading. Today’s highlights are a rate decision in Australia and American Pending Home Sales. Let’s see what’s up: Australia starts the day with the NAB Business Confidence, which is finally released. This will be overshadowed by a much more important event: the rate decision in Australia. Glenn Stevens is expected to raise the interest rate once again – to 4%, the fourth consecutive rate hike. This move is doubted by some economists. If the RBA leaves the Cash Rate unchanged, this could seriously hurt the Aussie. For gains, the Aussie will need a boost from future prospects. The accompanying RBA Rate Statement might supply clues. Read the AUD/USD forecast for more. In Switzerland, the SECO Consumer Climate is expected to improve, and might help the Swissy, against the will of the SNB. German Retail Sales are predicted to rise by 0.9%, similar to last month’s rise. The Euro needs good news. Also in Europe, PPI is predicted to remain unchanged. For more on Euro/Dollar, read the EUR/USD forecast. In Britain, Construction PMI is predicted to edge up from 47.1 to 47.7 points. Note that yesterday’s Manufacturing PMI was better than expected, but it didn’t really help the Pound. For more on GBP/USD, read the British Pound forecast. American Pending Home Sales plunged by 16% last month. This outstanding drop isn’t expected to be followed by another one. A normal, moderate rise of 0.4% is predicted this time. That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.    |
| Posted: 01 Feb 2010 11:51 AM PST
In the weekly video review on Forex TV, I spoke with Julie Sinha about this week’s events, technical levels to watch and finally an advice for new traders. Apart from the pairs I usually cover, I’ve mentioned also the NZD/USD which is at a pivotal spot 0.70. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.    |
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