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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

Risk on or off?

Published January 29, 2019

by Nicholas Cork

Strange days indeed as the AUD recovers from the supposed NAB inspired selloff which saw it test 0.7075 on Friday, to test 0.7200 again yesterday after the PBOC had announced late Friday that they have an extra 37 bio available for lending this week, but more likely as a result of a 5% rise in iron ore prices after the Vale dam tragedy.  The AUD remained capped at 72 cents yesterday then slid lower overnight as the DOW came under pressure after disappointing earnings from Caterpillar and Nividia, citing weak Chinese demand. The DOW at one stage was down 400 points before recovering 200 of those before the close, and Oil fell 3% as risk appetite began to sour. Currencies were mixed with the EURO at 2 week highs as Draghi says he doesn’t see a need for more stimulus, and the GBP keeps on squeezing higher, testing October 18 highs at 1.3200 ahead of a vote on amendments to the Brexit plan tonight.

Later this week sees the resumption of US-China trade talks, and the Federal Reserve rate decision. In other news the partial government shutdown ended over the weekend with temporary funding that will re-open agencies until the beginning of February. President Trump specified that he is willing to close the government again through the use of emergency powers if lawmakers fail to provide funding for the border wall by the deadline.

This week Iron Ore may come back to the fore, and may well underpin the AUD as further ramifications from the Vale disaster unfold.

IRON ORE (USD)   (reuters)