RBA Hold Back the Aussie, as Brexit Continues to be in Focus




RBA Hold Back the Aussie, as Brexit Continues to be in Focus
RBA Hold Back the Aussie, as Brexit Continues to be in Focus  

Earlier in the Day:

Economic data released through the Asian session this morning was on the lighter side once more. 1st quarter consumer sentiment figures out of New Zealand and 4th quarter house price figures out of Australia provided direction early on.

Outside of the numbers, the RBA released its monetary policy meeting minutes from 5th March. The minutes provided little direction for the Aussie Dollar.

For the Kiwi Dollar,

The Westpac 1st quarter consumer sentiment index fell from 109.10 to 103.8. According to the Westpac McDermott Miller Survey,

The Kiwi Dollar moved from $0.68544 to $0.68538 upon release of the figures. At the time of writing, the Kiwi Dollar stood at $0.6861, up 0.12% for the session.

For the Aussie Dollar,

4th quarter house prices fell by 2.4%, quarter-on-quarter. The fall comes off the back of a 1.5% decline in the 3rd quarter of last year. According to the ABS,

From the RBA,

The RBA Monetary Policy Meeting Minutes revealed that:

The Aussie Dollar moved from $0.70960 to $0.70999 upon release of the data and minutes. At the time of writing, the Aussie Dollar stood at $0.7106, up 0.03% for the session.

Elsewhere,

At the time of writing, the Japanese Yen was up 0.19% to ¥111.22 against the Dollar, which continued to struggle early on.

The Day Ahead:

For the EUR

Economic sentiment figures out of Germany and the Eurozone and Eurozone wage growth figures will be the key driver for the EUR.

Forecasts are mixed for the EUR. Economic sentiment is expected to improve in Germany. However, sentiment in the Eurozone is forecasted to weaken further. Wage growth could partially offset any negative effects on the EUR, however, if wage growth gathers pace.

While we would expect Germany's economic sentiment figures to be the key driver, risk sentiment will continue to influence throughout the day.

The markets will also continue to look at ahead to tomorrow's FOMC economic projections release and respond to any updates on trade and Brexit.

At the time of writing, the EUR was up 0.11% at $1.1349.

For the Pound,

January's average earnings and unemployment rate are due out alongside February's claimant count. We can expect the Pound to be particularly sensitive to the wage growth and claimant count figures on the day.

In spite of the sensitivity, the focus remains on the Pound, leaving any material moves in the Pound short-lived.

Uncertainty over whether a 3rd vote will take place this week gripped the Pound on Monday. We can expect pressure to persist until there is greater clarity on what lies ahead. The threat of member states voting against an extension leaves the prospect of a no-deal Brexit on the table.

At the time of writing, the Pound was up by 0.20% to $1.3281.

Across the Pond

After a quiet start to the week, January factory order figures will provide the Dollar with direction later in the day. While forecasts are Dollar positive, we would expect any upside to be limited. Sentiment towards tomorrow's FOMC economic projections is negative and will likely pin back the Dollar on the day.

Further progress on trade talks would also weigh on the Dollar through the day.

Support could come from a pickup in geopolitical risk, however. Brexit uncertainty remains, which could drive demand for U.S Treasuries.

At the time of writing, the Dollar Spot Index was down by 0.13% to 96.403.

For the Loonie

It's a quiet day on the economic calendar. With no material stats scheduled for release, market risk sentiment will be the key driver through the day.

The Loonie was up 0.04% at C$1.3329, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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Weekly Recap - New Zealand CPI Sinks Kiwi; Better China GDP, Domestic Jobs Data Not Enough to Save Aussie
Weekly Recap - New Zealand CPI Sinks Kiwi; Better China GDP, Domestic Jobs Data Not Enough to Save Aussie

Given the new CPI data, New Zealand economists are now predicting the Reserve Bank will cut its official cash rate from its present record low at 1.75 percent to 1.5 percent in May. Although traders are pricing in an RBA rate cut for later in the year, the employment report may have bought the central bank a little time. The AUD/USD price action suggests that traders may have increased bets the RBA will not rush to ease rates even though the broader economy has seemingly lost momentum.

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