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AETOS Market Commentary 12/03/2019

AETOS Capital Group Partnership


The Aussie made gains on Monday, closing at 0.7071(+34 pips) against the greenback. After opening the session at .7045, the AUD/USD eased lower in early Asian trade, weighed down by weak Chinese inflation and monetary growth figures for February released over the weekend.

After trying not once but twice to break below .7025, the AUD/USD began to reverse course late in the Asian session, helped by another late surge in Chinese stocks. That positive sentiment flowed through to European and North American trade, seeing the AUD/USD lift to as high as .7077 before easing marginally into the close.

The release of stronger-than-expected US retail sales data for January did little to help the greenback’s cause, partially because of downward revisions to already weak retail spending in December.

Instead, the improvement in risk appetite helped to lift other major currencies, including the Aussie dollar. Along with renewed optimism among traders, the US dollar was also weighed down by strong gains in the British pound ahead of a meaningful vote on Theresa May’s latest Brexit withdrawal agreement that will occur in the early hours of Wednesday morning on Australia’s eastern seaboard.

On what is installed for the economic calendar for today, NAB will be releasing their Australian confidence survey that will arrive at 11:30 a.m. AEDT. “Given the RBA’s focus on the labour market, we will be closely watching the capacity utilisation sub index which leads the unemployment rate by around six months,” said Catril at the NAB.“Last month’s survey suggests unemployment could tick higher over the next six months to 5.5% from 5.0%.” Alongside the NAB survey, the ABS will also release housing finance data for January with the number of owner-occupier loans expected to decline by 2%, according to economists surveyed by Bloomberg.


The Cable pair strengthened on Monday, closing at 1.3217(+234 pips) against the greenback.

The recent pound’s decline was related to headlines suggesting that PM May could be ousted, amid the lack of progress with EU's negotiations ahead of this Tuesday's Parliamentary vote on her deal. Despite multiple meetings that took place last week, no progress was achieved.

There were some market talks suggesting that Tuesday's vote could be a provisional one, indented to vote on the intentions of the government and not on a new deal, angering MPs.

The late advance was triggered by news indicating that UK's May and EU's Juncker will meet shortly in France, to try to clinch a last-minute deal. Irish Foreign Minister Coveney said that the EU was trying to put up a package to provide the Parliament with the reassurances they need, boosting optimism in the last trading session of the day.

UK lawmakers will decide this Tuesday, whether or not PM May's deal is enough. In the case it gets rejected, they can vote on an extension to the departure date beyond March 29 on Tuesday.


The Japanese Yen weakened on Monday, closing at 111.28(-21 pips) against the greenback.

The safe haven natured pair gained some upward traction amid risk aversion dominating the financial world at the beginning of the day, although softer-than-expected Japanese data kept gains at check.

Japan preliminary February Machine Tool Orders plunged by 29.3% from a year earlier, after printing -18.8% in January, signaling slowing economic growth continues.

The pair found some support in Fed's Chief Powell optimism about the performance of the local economy, later underpinned by Wall Street, as US indexes ended the day with solid gains.

US Treasury yields had little saying on the pair's behavior, ending the day little changed and near monthly lows. Japan will release during the upcoming Asian session the BSI Large Manufacturing index for Q1, foreseen at 4.8 vs. the previous 5.5.

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