Market News & Analysis
Australian dollar sinks on dovish tone from RBA
Upcoming high impact economic news:
11:00 USD US Federal Reserve Chair Jerome Powell speaks
11:30 AUD NAB Business Confidence survey q/q
23:00 GBP BOE Inflation report
23:00 GBP BOE Monetary Policy Statement
CNY – Chinese markets closed for Chinese New Year celebrations.
It was a bloodbath for the Australian dollar on Wednesday with the currency plunging more than 120 pips against the USD to close the session around 0.7117. The major sell-off comes after Reserve Bank Governor Philip Lowe changed his attitude towards raising interest rates.
Speaking at a luncheon in Sydney, Lowe took a more dovish stance towards raising interest rates, saying the current cash rate of 1.5% appeared to be “more evenly balanced”.
The comments fuelled speculation of an interest rate cut, particularly after the RBA downgraded its growth forecast for the economy. If seller’s momentum continues, the AUD could retest a low of 70.9 US cents, a level seen two weeks ago.
In equities, Australian shares are poised to open higher with the SPI Futures up 18 points at AEDT. The ASX closed Wednesday’s session 20 points higher, led by gains in technology and industrial stocks.
Overnight, U.S. markets closed weaker despite strong earnings reports from General Motors and Walt Disney. The Dow Jones closed flat, down 21 points while the S&P 500 fell 6 points. The Nasdaq slumped 26 points or 0.36%. U.S. President Donald Trump’s State of the Union address didn’t help spur confidence either. In his address, Trump said negotiations with China over a trade deal were ongoing but didn’t indicate whether a deal would be reached before the March deadline.
Today, traders will be listening to a speech by U.S. Federal Reserve Chairman Jerome Powell, who is set to speak in Washington.
In the United Kingdom, the FTSE’s winning streak came to an end with the index slumping 4 points lower as the Pound strengthened against the Euro. Tonight, the focus will be on Bank of England as the board prepares for its interest rate meeting. The central bank will also release its quarterly inflation report.
Chinese New Year celebrations continue with Chinese markets closed all week.
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