Yesterday we had AUD cash rate and statement coming out which was as expected an hold decision; the statement also didn’t provide much hints or direction for the policy of RBA.
The London session was relatively quiet with no tier one datas, and the GDT price from NZD was also not a surprise.
Later on we’ll have AUD GDP q/q in Asian session.
Sentimentally, all equity markets were once again closed in green to signal a yet another risk on sentiment.
WTI closed incisive as the market still waits more actions to follow up on the OPEC agreement for oil curb. Less than 8% of the energy professionals in the survey think that OPEC will actually achieve its target of oil curb in full.
News also stated that OPEC & Russia actually reported to have record high oil output last month.
-For EUR, the market is waiting for Thursday’s ECB meeting to give more clear direction, but the general tone is bearish as it’s mostly certain that ECB will continue the bond buying program, the upbeat will only come from the shorten period of it and/or signal for tapering soon.
The Italy referendum result also played a negative tone to the future of EUR but not as much as people expected.
-For GBP, the market has rebound but generally indecisive as traders are waiting for high court ruling; but the UK government once again expressed the determination for Brexit timetable to be met, which is leaning toward a hard brexit style in comparison to go through parliament. So the high court ruling result will cause significant volatility for GBP and give out clear direction.
-For CAD, the BOC meeting is tomorrow and the rate is expected to be hold. The CAD has also retraced due to the oil market retrace, and the over economy of Canada is really neutral to uncertain, so does the oil market and the BOC governor has also come out with the word “uncertain” for many times in the past.
The crude oil inventory is also out tomorrow which will also give some volatility for CAD.
-For USD, it continues to be strong both fundamentally and sentimentally. The current retrace is price action and also market is a bit nervous as FED meeting is coming soon, although largely expected to hike the rate, the future policy might jeopardize the FED decisions as few FED members already came out and cautious about the future fiscal policy - which is rare for FED to do.
Overall, the emerging market is still betting on dollar s that will support the currency fundamentally for long-term.
-For JPY, the currency has been down recently but the economy and the confident of producers have been up because it has helped the export a lot. Although the economy is picking up but for currency trading, it is still a sell for us.
-For CHF, similar story as JPY as export is important and SNB is always monitoring about their currency.
-For AUD, the RBA statement did not give too much direction, but general tone has been sentiment driven with the market which put them on top of a buying currency.
-For NZD, same story as AUD with relative good economy and high yield to attract investors in the recent risk on sentiment.
Both RBA & RBNZ also worry for the same housing bubble problems. Both are directly connect with China’s economy.
As for now, our strong currencies are still in favour of USD, AUD, NZD & GBP
Weak currencies are still EUR, CHF & JPY
We will stay out of CAD until NY session after the BOC statement to give us more hint.