Asia Session Close: RBA , India and Gold

The Reserve Bank of Australia pushed rates to a record low today, cutting 25bps to 0.75% with a dovish bias. With the domestic economy continuing to wane and the Federal Government showing no signs of fiscal expansion, the RBA was left with little room to manoeuvre as wage growth stagnates and consumers desert the shops.

The rate cut gave a boost to Australian shares with the ASX 200 climbing 0.80% to 6,743 after a slow start this morning. Lower rates weren’t so kind to the currency, the AUD falling 0.80% or points to 0.6700 this afternoon. Daily support remains intact, just, between 0.6670 and 0.6680. A break would mark out a new 10-year low and potentially implies a much larger move lower, possibly as far as 0.6200, could occur over the next few months.

Gold continued to be punished following its poor overnight session, falling another 0.55% to $1264.00 an ounce in Asian trading. With stock markets and the U.S. dollar performing well, and with no Mainland or Hong Kong buyers to support it, gold wilted as more stop-loss selling hit the street. The next critical technical support zone lies at the $1550.00/1553.00 an ounce region.

With China and Hong Kong closed for the week, regional markets elsewhere traded positively following Wall Streets lead and on improving trade wart hopes. The Nikkei 225 rose 0.90% to 21,943, the South Korean Kospi rose 0.40% to 2071, and the Singapore Straits Times rose 0.75% to 3143.

India’s stock markets have taken a sudden turn for the worse this afternoon with the Nifty 50 turning from positive initially, to plunge over 1.70% to 11,284. Yes Bank is lower by 22% on the session with that and other financials leading the sell-off.

The Nifty 50 has now retraced entirely, its powerful 10% rally, as worries persist about the health of the India banking system and a potential credit crunch. Exacerbating the moves could be the public holiday in India tomorrow for Gandhi’s Birthday.

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.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley