Dollar recovered the most on Monday against other majors despite a light-data trading day. Aussie Dollar stays at low after RBA statement, European currencies are relatively weaker, and Dollar Yen refreshed a recent high.
Reserve Bank of Australia was the first central bank to disclose their rate decision in this super week. RBA held the interest rate steady again as widely expected. RBA governor Stevens stated that economic growth is moderate. However, investment banks now are speculating that the possibility of rate cut in 2015 increased as the unemployment rate may rise and housing market seems to be cooling. These situations may give RBA some space for policy loosing. Aussie Dollar fell 4.5% this year, and the price of iron ore, which stands for over 20% export income, has decreased around 40% in the same period. Certainly, there is more drop on the front of AUDUSD in the medium-to-long term.
Euro fell 0.7% to 1.2380 yesterday, once again getting close to the year low 1.2360 level. The bearish trend line keeps pressing the pair. The breakout seems to be very close and may happen before the ECB meeting at December 4.
The stock markets were in a sea of green. The Shanghai Composite surged 3.11% to 2763 as central bank injected funds to the market. ASX 200 also rebounded 1.41% to 5281. The Nikkei Stock Average was up 0.42%. In the European stock markets, the UK FTSE gained 1.29%, the German DAX was down 0.30% and the French CAC Index advanced 0.25%. US market broadly rose as well. The S&P 500 added 0.56% to 2065. The Dow closed with a gain of 0.51% at 17867, and the Nasdaq Composite Index rose 0.47% to 4750.
On the data front, Australia GDP will be released at 11:30 AEDST. China official Non-Manufacturing PMI and HSBC Services PMI will be at noon. UK Services PMI will be released at 20:30 AEDST and Euro area Retail Sales will be at half hour later. US ADP Non-Farm Employment Change at midnight will catch most traders’ eyes.
Have a great trading day!
Anthony
NB: Please note all references to rates above are approximate
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