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- Nov, 20 USD Graphic Rewind
- Nov, 20 Opening Comment
- Nov, 20 Overnight Interest Rate Update 11.19.09
- Nov, 19 Japanese Yen Benefits on Risk Aversion, New Zealand Dollar Falters
- Nov, 22
- Nov, 19 Overnight Interest Rate Update 11.19.09
- Nov, 18 Swiss Franc Strengthens on U.S. Dollar Weakness, British Pound Falters
- Nov, 18 Canadian Consumer Prices Expand for the First Time in 5 Months
- Nov, 18 Opening Comment
- Nov, 18 Overnight Interst Rate Update 11.18.09
- Nov, 17 British Pound Remains Bid, Canadian Dollar Underperforms
- Nov, 17 U.K. Inflation Tops Forecast
- Nov, 17 Overnight Interest Rate Update 11.17.09
- Nov, 17 USD Graphic Rewind
- Nov, 16 Canadian Dollar Outperforms, Japanese Yen Lags Behind
- Nov, 16 Euro-Zone Consumer Prices Weaken For Fifth Month in October
- Nov, 16 Overnight Interest Rate Update 11.16.09
- Nov, 13 US Confidence Falls for Second Month
- Nov, 13 Overnight Interest Rate Update 11.13.09
- Nov, 13 German GDP Posts 2nd Quarterly Advance; Rises to 0.7%
OPENING COMMENT
The key highlight of the Asian session today has been the RBA rate decision with the central bank coming out and broadly disappointing hawks and Aussie bulls. While the central bank did indeed lift the rate by 25bps to 3.50% as was more than widely expected, the overall tone of the accompanying statement was much more accommodative and relaxed than was expected. The RBA failed to alter its previous statement and even went as far to say that the October and November hikes would work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead. This statement has opened a wave of Aussie selling after the central bank has now left the door open for a pause. The single currency is now the weakest performing currency on the day, with the market booking profits across the board on long Aussie positions. The Aud/Nzd cross rate has been hit the hardest, with market participants looking for the next best yielding major currency as an alternative. Kiwi is the top performing currency on the day as a result, while also being well propped following the stronger round of data on Tuesday including some second tier employment data and a solid commodity price index. Elsewhere, the BOJ has come out with its outlook for economic activity and prices, concluding that the recovery in Japan will likely ease until the middle of FY 2010.
RBA REFLECTIONS
We contend that the latest RBA statement is very appropriate and puts the central bank in a much better position in light of the fragile global economic environment. We had questioned the previous rate decision and were even more concerned with what we believed to be an overly hawkish central bank that was not properly protecting itself against the risks for a potential double dip global recession. We now see the RBA in a much better position after pulling back a bit and now leaving the door open for a pause in rates going forward. Arguably, a more hawkish RBA that continued to signal more hikes ahead, would have had a more detrimental impact on the Aussie, with market participants likely to grow concerned that the central bank was starting to lose touch with the reality of the broader global macro environment. This hedged approach should ultimately serve to benefit the Australian economy going forward.
Looking ahead, the European calendar is very light, with the only major release coming in the form of UK PMI (47.2 expected) due at 9:30GMT. US equity futures point to a higher open, while gold has taken center stage on the commodity front after rallying over 10 bucks. It is worth noting that the move comes a day after attention was given to the possibility that China was shifting away from USDs and into gold.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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