Author: Steve Oram
The Aussie Dollar remains stuck in its 30pt range even as a risk-off tone returned to global markets with the U.S – China trade war continuing to weigh on market sentiment. The US Dollar has made further gains on the back of this cautious tone making ground against most currencies overnight.
The Japanese Yen and Swiss Franc were also firm given their safe haven reputations, AUD has largely been ignored so far this week. The Canadians as expected kept interest rates unchanged overnight, as markets believe the central bank is in no hurry to move the rate any time soon.
China Looks at Retaliation Options.
There are growing concerns over China using its monopoly in the global supply of rare-earth elements as a means of countering US trade measures. The main outlets for the Chinese central Party have recently published reports highlighting this possibility as the country controls 80% of global supplies. These products are used in a wide range of imported consumer goods and electronics.
Expectations of a RBA rate cut next week are growing. More analysts are now predicting a 25 point cut next week, and some have gone further, with one major bank predicting the RBA will cut its cash rate by 100 points by the middle of next year. The cash rate currently sits at 1.5% and hasn’t been adjusted since August 2016. The Australian Dollar has remained fairly stable above the 0.6900 level this week, although next week could be a volatile one with RBA set to announce its rate decision on Tuesday afternoon.
Today we will see a ramping up of fresh data releases, April month data for HIA new home sales, building permits and first quarter (Q1) reading of private capital expenditure will be in the spotlight locally together with trade war developments. Later all eyes will be on the US, with preliminary gross domestic product (GDP) data for Q1 2019.
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