News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Do you know the difference between investing and trading? Because while the goal might seem the same, they're very different things . Learn more here.https://t.co/fG6fNEPj9q https://t.co/ymGaYjrl1g
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/FOMcsxci50
  • Further your trading knowledge and gain informed market analyses from our expert analyst @DavidJSong on Oil with our free Q4 guide, available for free today.https://t.co/Y6XECmr5fQ https://t.co/XQI3PN4bkQ
  • Nasdaq 100 may hit new high soon. https://t.co/ACtVqiOBl0
  • HSTECH index has likely formed an "Inverse Head & Shoulders" pattern. https://t.co/YFIQEYmuyq
  • The HSI has likely formed a “Double Bottom” chart pattern, which is usually viewed as bullish-biased. https://t.co/wMQ14A867Q
  • When markets are falling, how can you short sell? Learn more here:https://t.co/K4EFd6A6xd https://t.co/ynjtSQqHVy
  • Futures have their own set of characteristics and appeal to different types of traders and investors for a variety of reasons. Get your free trading guide and learn to trade the markets with futures here. Download your guide today!https://t.co/72oKM0kLHL https://t.co/dLBhWmxuub
  • Relative stability in EUR/USD has masked weakness in the Euro against most other major currencies, and that weakness can be expected to persist in the week ahead and likely for longer. Get your weekly Euro forecast from @MartinSEssex here: https://t.co/g6aCr7Uxg2 https://t.co/KZHBa4GXCN
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/Z8oipLero0
S&P 500 Rejoiced on Fed Buying Corporate Bonds. AUD Eyeing RBA Minutes

S&P 500 Rejoiced on Fed Buying Corporate Bonds. AUD Eyeing RBA Minutes

Dimitri Zabelin, Analyst

US Dollar, Fed Corporate Bond Buying Program, AUD/USD Analysis – TALKING POINTS

  • US equity markets swooned before reversing losses as the US Dollar fell
  • Federal Reserve said it will start to purchase individual corporate bonds
  • AUD/USD nursed losses but gains may be capped ahead of RBA minutes

Wall Street trade had a day of twists and turns after initially seeing major equity indices gapping lower before sharply recovering and ending in the green. The shift in market mood came after Federal Reserve Chairman Jerome Powell announced that monetary authorities will start purchasing individual corporate bonds in addition to ETFs. The acquisition of these assets will be conducted under its Secondary Market Corporate Credit Facility.

In a news release, the Fed said the point of targeting individual corporate debt assets under its $750b program is to “to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds”. After the announcement, the spread of credit default swaps (CDS) on investment grade entities narrowed by six basis points, reflecting an alleviation of tension in credit markets.

The optimism permeated the membrane of asset classes and sent Treasury yields tumbling and cycle-sensitive FX – like NOK, AUD and NZD – higher at the expense of the anti-risk Japanese Yen and US Dollar. Crude oil edged higher while gold prices tumbled. The next major event equity markets will be watching will be the upcoming testimonies from Mr. Powell on Tuesday and Wednesday. Read more about it here.

Tuesday’s Asia-Pacific Trading Session

The euphoria during Wall Street trade will likely echo into Asia and help push sentiment-linked assets and emerging market FX higher. Anti-risk currencies like the US Dollar and Japanese Yen may start bracing for what could be another session of losses. AUD will be closely watching the release of the RBA meeting minutes, which – depending on the nature of the text – could curb some of AUD/USD’s recent gains.

AUD/USD Technical Analysis

AUD/USD was continuing its descent after being rejected at the early-January swing-high at 0.7018 but was saved by risk appetite over the past 24 hours. The pair is now hovering at a familiar and critical inflection point at 0.6911. If AUD/USD is unable to retest the ceiling from which it had just capitulated, the selloff may deepen. Conversely, puncturing it could inspire additional buyers to enter the market.

AUD/USD – Daily Chart

Chart showing AUD/USD

AUD/USD chart created using TradingView

--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitriTwitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES