Author: Nicholas Cork
Well the post G20 euphoria was short-lived as doubts emerged over what was actually achieved on trade, with details sketchy from the US side and the Chinese refusing to comment. Also weighing on sentiment was chatter around the longer term health of the US economy, when nerves got the better of traders and US long term interest rates were hammered as traders liquidated, with the US 10 year and US 30 year interest rate yields falling 0.15% and 0.22% respectively over the last 2 trading sessions (they are big moves for long-term rates). The next peg to fall was equities with the DOW down 800 points or a whopping 3%. The subsequent flow into safe-haven currencies saw the YEN gain the most amongst the major currencies.
After rising slightly post RBA meeting yesterday the AUD failed again for the 2nd day running just shy of 74 cents, and after testing 0.7325 lows overnight once equities slid, it starts today hovering around 0.7330. Technically the NY close for the AUD is a little bearish today, as it lands below the range of the previous day, and the RBA gave no new insights into rate hike timings which are still forecast to be one year plus away.
Although US long term interest rate yields fell hard, both the AU and US 2 Year yields have eased in tandem hence the pressure from a yield disadvantage to the US remains for the AUD. In NZ, Dairy Prices have risen for the first time in 6 months giving the NZD a boost and pushing AUDNZD to 8 month lows (repatriators’ of Kiwi take note!)
Today sees Australian Q3 GDP release at 11.30, more interesting may be the Asian equity market open.
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