The dollar had another good day yesterday as we saw further strong moves across the financial markets, although volatility is returning to more normal levels as the week progresses. The equity markets had a bit of a mixed day and the US indices finished up lower but certainly not to the extent we saw earlier in the week, major commodities continue to come off of recent high prices and the currencies are reacting accordingly. The Dxy is now back above 90.00 as the dollar appreciated against all the major currencies, the Euro is back under 1.2300, cable seems to be consolidating under 1.4000 and the Aussie is looking to challenge yearly lows in the next trading sessions.
The Aussie dollar has continued to depreciate across the board after poor retail Sales numbers, a conservative RBA rate announcement and falling commodity prices. It was joined this morning on the defensive by its cross Tasmam cousin the kiwi, as the RBNZ kept rates on hold as expected but cut it’s growth forecast for Q1 from 1.2% to 0.9%, this saw the NzdUsd down sharply in early trading from 0.7300 to around 0.7220.
Looking ahead to todays trading and we have further risk events in the pipeline, the Asian session is relatively quiet now that we have the RBNZ out of the way, although Aud traders will be keeping an eye on the NAB Business confidence numbers at 11.30 am and RBA Governor Lowe is speaking later in Sydney. The main focus for the markets comes in the London session when we have the Bank Of England’s latest rate decision, market expectation is firmly in the ‘no change’ camp but traders will be looking closely at the Inflation report and the voting statistics and we expect to see some volatility in the cable and the sterling crosses both before and after the event – due at 11.00 pm.
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Wednesday’s City: Nice, France