The Reserve Bank of Australia (RBA) kept rates unchanged in their latest announcement. They expressed slight concern over inflation, but little worries on the slowdown in Asia. Their comments were viewed as relatively optimistic, especially with their largest trading partner experiencing slowdown. Better-than-expected GDP helped to lift the Aussie to its 6-month high, heading towards 0.75. The recent quarterly GDP came in at 0.6%, outperforming consensus of 0.5%. The previous figure was revised upwards from 0.9% to 1.1% as well. RBA voiced their preference of the Aussie trading around 0.65 in previous statement. If their preference remains unchanged, do watch out for possible jawboning in their upcoming statements.
Non-Farm Payroll (NFP) exceeded expectation; figure came in at 242K far better than the forecasted figure of 195K. This is the fourth time NFP posted figure exceeding 200K in the last five releases. However, reaction from the market is muted. The Greenback rallied against Euro and Yen, only to return to pre-NFP levels within the first 30 minutes. The unemployment rate maintained at 4.9% and the disappointing average earnings shrunk by 0.1%. The overall result is still considered good, but not good enough for market to increase their bet on Fed rate hike in the upcoming FOMC.
Some 15 countries, including OPEC & non-OPEC countries, are expected to meet later this month on 20th March. Nigerian Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu, said there will be “dramatic price movement” when the meeting takes place. WTI has been consolidating around $34 per barrel and market found the reason to push it beyond $36 a barrel, gaining close to 40% in less than a month. The pressure for more aggressive collective move has eased, but the momentum to do “something” must be maintained. Any disappointing deal struck after the meeting may result in “dramatic price movement”.
There are three interest rate announcements within a period of 24 hours this week; Bank of Canada, Reserve Bank of New Zealand and European Central Bank (ECB).
The Loonie gained 10% against the dollar in 2 months, thanks to the recovery in oil prices. Hopefully the gain could translate to some positive effect for Canada in the short/mid-term. New Zealand saw some light with the prices of diary products rising for the first time in 5 months. The recent flow back to risk currencies pushed the Kiwi higher by 3.5%, may negate the gain in prices of diary products. The finale would be ECB announcing the anticipated stimulus. If they repeat their disappointing act last December, EURUSD could head towards 1.11 or beyond. We expect the three central banks to maintain their interest rates unchanged.
Our Picks
EURUSD – Bearish, unless ECB fails to meet market’s expectation in their stimulus.
GBPJPY – On a technical reversal, just bounced off the 38.2 Fibonacci level, possibly retracing to the 23.6 level before heading upwards again.
Gold – Slightly bullish with immediate Support around 1250 and Resistance around 1278.
Top News This Week
Canada: Overnight Rate. Tuesday 9th March, 11pm. – We expect figures to remain unchanged at 0.5% (previous figure was 0.5%).
New Zealand: Official Cash Rate. Thursday 10th March, 4am. – We expect figures to remain unchanged at 2.5% (previous figure was 2.5%).
Europe: Minimum Bid Rate. Thursday 10th March, 8.45pm. – We expect figures to remain unchanged at 0.05% (previous figure was 0.05%).
Fullerton Markets Research Team
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