Market Brief: AUD Lower On Dovish Westpac Call
View our guide on how to interpret the FX Dashboard
- Continuing yesterday’s trend, it was mostly a quiet session for FX in Asia due to lack of economic data and general news flow. Until Westpac forecast RBA to cut 2x and begin QE by June 2020. This follows on from Dr Lowe’s speech yesterday where he effectively ruled out negative rates, yet left room for further cuts and the potential for QE (but not until rates hit 0.25%).
- AUD was quick to react and shed 20 pips and is now the weakest major of the session, AUD/NZD touched a 3-month low AUD is the weakest major and USD is the strongest, volatility remain contained overall though with daily ranges around 20-50% of the ATR’s. AUD/USD is the biggest decliner, EUR/AUD is the leader of the back with NZD/JPY a close 2nd.
- Positive comments from Trump on trade saw NZD/JPY touch is highest level since August 2nd, yet the small range with 70.27 resistance nearby makes it vulnerable to a dip lower.
- Construction work done in Q3 beat expectations, by only contracting by -0.4% versus -1.0% expected. It’s a minor victory at best though, as the sector has contracted for the past 5 quarters.
- DXY: This week has provided a spinning top Doji and bearish inside day on the daily charts below 98.45 resistance, which feeds into the potential for mean reversion from current levels. Still, with it being a quiet week data-wise, it could simply consolidate around current levels without a catalyst and we’d revisit the potential for a bullish break.
- AUD/USD: The dovish forecasts from Westpac has seen sellers return so support around 0.6700 is back within focus. A clear downside break of this level brings 0.6750 and 0.6723 support into view for bears.
- USD/JPY: Yesterday’s candle is reminiscent of a bearish hammer, although the body is wider than textbooks would like. Yet with it closing beneath 109.76 resistance, there’s still potential for a swing high to form. It all comes down to a trade deal – if markets believe one will materialise, expect USD/JPY to head for 109.47, whereas if it appears dead in the water (again), then we’ll get the bearish catalyst.
- U.S. President Trump’s ‘final throes” remark on the completion of the U.S-China Phase One trade deal has muted effect on Asian stock markets even though U.S. major stock benchmark indices; S&P 500, Nasdaq 100 and Dow Jones Industrial have soared to hit another round of fresh all-time highs respectively.
- Mix performances so far for key Asian stock indices with China A50 down by -0.15% and Singapore’s Straits Times Index and Hong Kong’s Hang Seng Index are almost unchanged. The top performer is from Australia’ ASX 200 that has rallied by close to 1.00% reinforced by RBA governor Lowe’s speech yesterday that quantitative easing monetary policies can still be implemented by RBA if “certain conditions” warrant.
- The AXS 200 is now breaking above last week’s high of 6814, also a 3-month high led by the Telecommunications Services and Technology sectors that have gained by 2.53% and 1.16% respectively.
- Overall, Asian stock markets need more clarity on the U.S-China trade deal and what is in store for “Phase Two” rather than just “optimism talking”. Also, on the signing off on the Hong Kong Human Rights and Democracy Act into legislation where U.S. President Trump has been “sitting on it”. Beijing has continued voiced displeasure and vowed to retaliate, thus may complicate the on-going trade deal negotiation talks. If Trump opts to do nothing, the bill will automatically become law on 03 Dec. If Trump veto it, the bill can still be overridden by two-thirds majorities in the House and Senate where most Democrat and Republican law makers support the bill overwhelmingly.
- The S&P 500 E-Mini futures is trading almost unchanged in today’s Asian session with a tight range of 5 points.
Matt Simpson and Kelvin Wong both contributed to this articleData from Refinitiv. Index names may not reflect tradable instruments and not all markets are available in all regions.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.