Aussie very subdued in APAC trade

[REUTERS SYDNEY] The Australian and New Zealand dollars treaded water against the greenback in holiday-thinned trade on Monday, with both currencies headed for their best monthly gains since early 2016.

Liquidity in Asia was lighter than usual with financial markets in Hong Kong, China and Singapore shut for the Lunar New Year holiday.

The Australian dollar held at US$0.7551, not too far from its 2-1/2 month peak of US$0.7609 touched last week. It is already up nearly 5 per cent this month, on track for its best monthly performance since March 2016.

The currency has been swinging in a tight 75-76 US cent band, having struggled to stay above 76 cents after disappointing domestic inflation figures last week underlined the risk that interest rates were more likely to move down than up this year.

Some analysts expect the Australian dollar to weaken if inflation fails to hit the Reserve Bank of Australia’s (RBA) target band and if the country’s red-hot housing market slows down.

“The sentiment has shifted from a possible RBA rate hike bias to a greater chance of an interest rate cut,” said Stephen Innes, senior trader at Oanda.

“If a slowdown in the Australian housing market unfolds as some expect, an RBA rate cut will be on the table in 2017. If this likelihood becomes a reality, look for the Aussie to move towards US$0.7000.”



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.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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