- MarketPulse - https://www.marketpulse.com -

RBA Rate Cut Squeezes AUD

Asian bourses have ended trading, hitting four-month lows as weaker US data added to rising worries over Europe. Commodities and their currency sensitive pairings are not immune to the surround sound of contagion fears. Gold has been able to dig itself out of Monday’s bear market trap, ending on a high, and in the black. The same cannot be said for the Aussie, usually a strong yellow metal supporter, which is seen as higher risk because of the country’s commodity price exposure and high exchange rate. The RBA’s dovish stance is reducing the AUD’s yield spread advantage, adding to the fears of a hard landing in China. The continued aversion to risk is pushing down high-yield currencies. Euro political concern and weaker US data are having an exaggerated effect on the currency. The Aussie rate market continues to rally, pushing 2-year government yields down as the OIS market moves to price in a high probability that the RBA will deliver a -50bp cut on June 5.

Below are some other highlights of the week:


ASIA

 

AMERICAS Week in FX [1]

EUROPE Week in FX [2]

 

WEEK AHEAD

  • Inflation letters and Expectations are released in NZD and GBP
  • CBank statements, announcements and minutes come from JPY and GBP
  • USD, CAD and GBP provide Home and Retail Sales numbers
  • GBP has quarterly growth
  • HSBC Flash manufacturing is delivered by CNY
  • German ifo Business Climate will pique EUR interest
  • USD will finish the week with Durable goods and Claims

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell [7]

Vice-President of Market Analysis at MarketPulse [8]
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

Latest posts by Dean Popplewell (see all [7])