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AETOS Market Commentary 27/02/2019

AETOS Capital Group


The Aussie continued to strengthen on Tuesday, closing at 0.7182(+11 pips) against the greenback.
The Aussie currency hit a one week high against the greenback on Tuesday.
After opening the day with 0.7171, the AUD/USD initially fell in Asian trade, weighed down by profit-taking in equities after a strong run on Monday.
The move was moving in parallel with the Chinese yuan which hit a multi-month high against the greenback a session earlier. However, after bottoming at .7141, the AUD/USD erased those early losses and more as European markets opened, finding ground in the session following an appearance by Fed Chair Jerome Powell before the US Senate Banking Committee. “Powell reiterated that the Fed would be ‘patient’ with interest rates,” said FX Strategists at the National Australia Bank.“He said the US economy remained healthy, although it faced ‘crosscurrents’ from more volatile financial markets, slowing growth in China and Europe, and uncertainty around US-China trade negotiations and Brexit. Turning to the day ahead, there’s a steady stream of data that carries the potential to generate short-term volatility in the Aussie dollar. Data on Australian construction work undertaken in the December quarter be released at 11.30am AEDT, providing the next partial inputs ahead of Australia’s Q4 GDP report next week.“[It] will be important in so far as the both the private residential and non-residential work done numbers feed into next week’s GDP figures,” says the NAB’s FX Strategy team. “The NAB expects residential work done declined 2.2% in Q4, following the 1% decline in Q3. For private engineering work, we are forecasting a 3% decline — linked to the ongoing completion of major LNG projects — more than offsetting an expected 2.5% quarterly rise in public engineering work.”
อUS Fed Chair Jerome Powell will also be in action, this time before the House Financial Services Committee, which should not be major price action as he has already given the speech prior.


The Euro rose and closed at 1.1390(+26 pips) against the greenback on Tuesday. Main movement for Wednesday was taken over by Brexit-related headlines, signifying that PM May could be willing to delay the departure day, which provided Pound a nice boost which pushed the greenback lower in an uneven manner across the board.
Moreover, on the data front, US macroeconomic data came out lower than expected, with December Housing Starts collapsing 11.2%, and the Atlanta Fed's GDP estimate downwardly revised to 1.8% ahead of the official Q4 preliminary estimate. Fed's Chief Powell testified before a Senate special committee on monetary policy but failed to impress, further denting dollar's demand.
The shared currency benefited from broad dollar's weakness, but its advance was shallow, as the EUR/USD pair traded between a well limited 50 pips' range. Indeed, the pair reached a fresh 3-week high near 1.1400, barely surpassing the previous one, but concerns about slowing economic growth in the Union kept EUR's gains at check.
This Wednesday at 21:00 AEST, the EU will release some money data and the February Economic Sentiment Indicator, foreseen at 106.0 vs. the previous 106.2. The US will release December Trade Balance, January Durable Goods Orders, and Pending Home Sales.


The Japanese Yen strengthened on Tuesday, closing at 110.56(-47 pips) against the greenback. Risk appetite eased as buyers struggled to keep buying just on hopes the US and China will come to an agreement, giving a limited impulse to the safe-haven yen, while the greenback fell as Brexit-related news pushed it lower. Furthermore, US Treasury yields kept easing, also backing a slide in the pair. At the beginning of the day, BOJ's Kuroda offered a speech, in which he expressed hopes the Chinese economic growth will pick up later this year, somehow expressing the central bank's concerns about economic developments in the neighbor country.
In the data front, Japan’s final Coincident Index slid to a level of 101.8 in December from 102.9 in January. The final Leading Economic Index declined to 97.5 in the same month vs. the previous 99.1. There are no macroeconomic releases scheduled in Japan this Wednesday.

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