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AETOS Market Commentary 07/03/2019

AETOS Capital Group Partnership

AUDUSD

The Aussie tumbled on Wednesday, closing at 0.7028 (-58 pips) against the greenback. The Aussie fell to a new two months low as weak economic growth spurred speculation of a higher chance of rate cuts from the RBA in the year ahead.

After starting the session at 0.7086, the came under selling pressure following the release of the Australia’s latest GDP report, revealing the economy grew by only 0.2% in the December Quarter.

JP Morgan and Macquarie bank have also now move to forecast 50 basis points of rate cuts from the RBA this year. The weakness in the AUD/USD came despite news that the US trade deficit ballooned to the highest level in a decade in December, along with data showing hiring in the US private sector slowed sharply in February.

The Aussie also lost ground against the euro, finding little support from speculation that the European Central Bank (ECB) may be about to introduce another round of low-interest loans to lenders to help support economic activity. Turning to the day ahead, it will be another busy day for traders with a raft of important Australian economic data releases on the way, continuing the deluge of information already received this week.

At 8.30am AEDT, the Ai Group will release its Performance of Construction Index (PCI) for February. Given recent trends in construction and housing-related data, it’s unlikely to be good. Three hours later, the ABS will release Australian trade and retail sales figures for January. The latter will garner most market interest, and is the most likely catalyst to spark short-term volatility in the Aussie dollar.

EURUSD

The Euro made minimal movements on Wednesday, closing at 1.1306(+1 pip) against the greenback.

The greenback remains the strongest, despite losing some ground against a few rivals on the back of softer-than-expected US data. The ADP survey showed that the private sector added 183K new jobs in February, less than the 189K expected. However, the January figure was upwardly revised to 300K from an initial estimate of 213K, offsetting the negative headline.

MBA Mortgage Applications fell by 2.5% in the week ended March 1st, down from 5.3% previously, while the December Trade Balance deficit increased to $59.8B. There were no macroeconomic news coming from Europe. The EU will take center stage this Thursday, as the country will release the final version of the Q4 GDP, expected unchanged from the previous estimate of 0.2%, while the ECB will have a monetary policy and report in consequence.

Market players are anticipating that policymakers will keep rates on hold, with the risk being downward revisions to growth and inflation forecast, something that anyway is being anticipated. The length of such revisions, if they occur, may determinate the fate of the common currency.

USDJPY

The Japanese Yen strengthened on Wednesday, closing at 111.72(+13 pips) against the greenback.

The time off of economic data releases coming from Japan exacerbated range trading at the beginning of the day, with the later decline a consequence of a weaker dollar following soft US data and easing government bond yields, with the benchmark yield for the 10-year note down to 2.69%. Adding some pressure on the pair, Wall Street extended its bearish rout.

The upcoming Asian session will bring Japanese Leading and Coincident indexes for February, seen decreasing further from the previous month.

Risk Disclaimer

The information above is of general nature only and does not take into consideration your objectives, financial situation or investment needs. The products and services provided are issued by AETOS Capital Group Pty. Ltd. (AFSL: 313016, ACN: 125113117). Trading Forex margin and CFDs carries a high level of risk, and losses can exceed your deposits. You are strongly recommended to seek independent financial advice before you make an investment decision. Please refer to our Product Disclosure Statement which you can obtain from our website for more details. AETOS has the ownership of the contents of this FX commentary. Copying, reprinting or publishing to a third party is not permitted.

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Source: https://www.aetoscg.com/uk/market-commentary
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