Authors: Brett Gordon / Steve Oram
The AUD bounced a little overnight even after the release of the Reserve Bank of Australia (RBA) minutes from its June 3 monetary policy meeting. At that meeting, the Board decided to lower the cash rate by 25 basis points to 1.25 percent. The Board made this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target. Biggest headline was the RBA saying further Rate Cuts “More Likely Than Not”
AUD rose as optimism of a trade deal returns to markets following US and China President’s Trump and Xi agreeing to meet in Japan next week for extended talks at the G20 summit. Trump tweeted in a post “Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting” The Kiwi rose 0.5% on the announcement.
Last week was a strong USD off the back of a dovish Fed. While most are anticipating three rate cuts from the Fed via the dot plot matrix, it may remain stretched. Today the USD short side could look attractive, but that said some areas could be more conducive for items of USD strength, and those are pairs like AUD/USD and USD/CAD.
Focus turns to the Federal Reserve meeting tomorrow morning with markets expecting Powell to follow the Dove’s with an 80% chance of a rate cut in July. Followed by RBA Governor Lowe giving a speech in Adelaide.
European Central Bank President Draghi offered the strongest indication yet that the central bank will unveil another round of stimulus if weak growth and political uncertainty continue. He stated that there is “considerable headroom” to launch a fresh expansion of the €2.6tn quantitative easing programme.
Sterling could also be in for a bumpy ride over the coming days, with a range of potentially market-moving events with consumer inflation and retail sales tonight and the Bank of England’s monetary policy announcement on Thursday
© Copyright - EncoreFX, 2018.EncoreFX (Australia) Pty Ltd ABN 42 607 244 879 AFSL 479 870 is the issuer of the financial products in Australia. The information on this website has been prepared without taking into account your objectives, financial situation or needs and so before acquiring any financial services or products from EncoreFX, you should consider the appropriateness of the information having regard to your own objectives, financial situation or needs. You should obtain the product disclosure statement (PDS) for the relevant product and consider the PDS before making any decision to acquire the product. The information on this website is not directed at residents of any country other than Australia and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. It is the responsibility of visitors to this website to ascertain the terms of, and comply with, any local law or regulation to which they are subject.
Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (Australia) Pty Ltd on 30 March 2020.
Rees Logan, Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (NZ) Limited on 30 March 2020.
Any queries regarding the Administrations should be directed to firstname.lastname@example.org.