- bear Aussie seek support for Stevens
- Kiwi takes off for temporary insurance
- Loonie dithers in the middle for now
- Governor Poloz will only
recent actions and rhetoric of Commonwealth Prime Ministers and their political leaders, have their sensitive commodity currencies under pressure.
In Australasia, the Kiwi ($ 0.6592) and Australian dollar ($ 0.7370) both remain within striking distance of their lowest in six years. In North America, the loonie has fared no better, straddling her own six-year low, while the attack on the Bank of the last week of Canada (BoC) rate reduced to 0.5%. For now, dealers and investors are willing to negotiate as if they do not provide short term reprieve market for these commodities and interest-sensitive currencies.
There are a number of key events this week that are expected to seal the short-term fate for a couple of currency pairs. Tomorrow down-under, Aussie Q2 inflation numbers and a speech by Governor Stevens from the RBA is expected to have a significant impact on the AUD.
Until now, the recent "big" dollar sentiment and softer global commodity prices, including gold and iron ore, have to be reached AUD. Overnight, the Reserve Bank of Australia (RBA) has had the opportunity to adjust his speech on the labor market with the publication of its meetings MPC minutes.
Reserve Bank of Australia (RBA) July Minutes
In the session overnight, the RBA released the minutes its July meeting. The report revealed that Australian politicians continue to "straddle the fence", which is likely to keep short-term rate expectations more in check. Or will it?
The RBA warned that the strength in Q1 GDP failed to continue in Q2, despite the Australian unemployment rate pushing 6%, which is below the initial forecast banks of up to 6.5%. The market will be looking for clues from the governor to see if it will change the bank's melody on the labor situation. In any Aussie makers perspective, it would be quite difficult, especially with recent data continues to show a soft economy that continues to grow well below trend. However, the central bank noted that "demand for labor intensive 'should succeed in further lowering the unemployment rate in Australia. The minutes also reiterated that inflationary pressures are well contained and called for further decline in AUD to help the economic recovery.
Wednesday, the RBA should ignore inflation print and focus on the core (+ 0.6% e q / q), which is expected to remain benign. This will continue to reflect the continued growth of low pay and support a "sub-par" performance economy further. If it is in line with expectations, the inflation data is unlikely to be sufficiently low to justify a rate cut immediate (+ 2%). the market will be looking to the speech of Governor Stevens later in the day on economic policy issues for other clues that the minutes reveal a moderately accommodative spin on recent economic developments.
Kiwi Takes temporary flight
Not unlike his partner Australasia, the Australian dollar, the value of the Kiwi ($ 0.650 ) has been undermined by the dollar rate of call "great" and the world price of raw material gases.
to date, the interest of selling the outright market was driven by prices dairy products down sharply and low inflation figures. But since Monday, the NZD managed to tick higher, benefiting from comments made by the Prime Minister of New Zealand John Key who said that the NZD has "fallen faster than expected."
With the market being very short for a very long time, it is not surprising to see the NZD rally, as some investors book profits while others are ahead of the insurance policies Thursday's reserve Bank of New Zealand (RBNZ) monetary policy meeting.
The market has fully priced in a rate cut and waits a statement very "status quo." If the RBNZ fails to deliver, there would be a massive short squeeze upward, therefore, the "pre-squeeze." If the central bank does not provide, technical analysts expect NZD $ 0.6499 is short-term risk for failure, exposes 0.60 NZD $, assuming that the RBNZ cash reduced rates even further in the coming quarters. Currently, traders are cutting prices in a -25bps to 3%, but a small percentage of traders seeking -50bps ease.
a -50bps cut may be too much, too soon. -50bps Cup suggest that the RBNZ is caught behind the curve and is not necessarily the case, despite the challenges of the Kiwi economy. Nevertheless, traders money market are price reductions at a record level of 2% by year end. the obvious danger for trade short NZD crowded is if Governor Wheeler RBNZ does not provide.
Poloz Goes It Alone
Bank of (BoC) Governor Poloz Canada could not count on the Fed to do the job for him. The higher rates would weaken the U.S. dollar and support Canada's export market, which was offset by weak commodity prices. However, the fixed income market is finding it difficult any price in a Fed rate hike by year end.
Last week, the BoC went alone and reduced the overnight rate by -25bps to + 0.5%. lower growth profile of Canada, from a disappointing H1 this year, sealed positive actions of the BoC. In its quarterly report on monetary policy, the Bank of Canada provided that Canada would enter a recession in Q2. Governor Poloz now seen shrinking Q2 growth of 0.5%, a significant decline in growth of 1.8% it had previously expected.
This is the second consecutive decline in quarterly growth. "Real GDP in Canada is now estimated to have contracted modestly in H1 2015, resulting in a marked increase in excess capacity and downward pressure on inflation." The cup, 'wait and see', telegraphed a message from the governor that Canada should show growth to pick up in Q3. This is the second time that the BoC cut rates this year and at 0.5% there is still room for Canadian policy makers to do more if necessary. The OIS market is currently pricing in a 50% probability that the BoC cut rates at its September meeting, and a 33% chance that the bank will reduce again in October.
However, just 'wait and see' approach could allow USD / CAD with a small "status quo bias", which could cap the drop striking distance loonie to its lowest multiyear (CAD 1 , $ 3,035). Despite the USD demand on pullbacks, loonie bulls will be looking in crude oil prices some support.
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