The AUDUSD tracked lower after the Reserve Bank of Australia chose to put rates on hold at their meeting yesterday, leaving the Cash Rate at 4.1%. They suggested that recent data was consistent with inflation returning to target and that they are seeing earlier rate hikes work through the economy as demand slows and labour markets loosen up. That said the bank has not ruled out further tightening of policy, which will be data dependent and should inflation require further pressure to return to targets of 2-3%. The AUDUSD has fallen to pressure the 0.66-cent levels and depending on the outcomes of US Non-Farm Payrolls later in the week, could test the yearly lows. Overnight however, lacklustre US data for ISM Manuf PMI and a notch down by Fitch ratings for the US long-term foreign currency rating to AA from AAA, has softened the US-dollar and lent support back to the falling Aussie. The AUDUSD trend remains sideways between familiar ranges of late, though with a pessimistic RBA , softer China economic data releases and expectations for more positive data out of the US, one would favour another leg lower on the antipodean pairs. A break of 0.66-cents should target 0.6540’s , while consolidation on the flip side will see advances above 0.6670’s alleviate some of the pressure.
Wall Street indices were mixed for the day as the new month opens up as investors look to the next round of economic data for the US and continue to monitors seasonal corporate earnings reports. The DJI gained 0.2%, the S&P500 lost ground by -0.3% and the Nasdaq shed -0.4% for the session. Australian shares are set to open flat with mixed performances on commodities and China demand concerns dampening investor appetite for the local market.
Gold prices dropped by 1% for the day as investors shunned the lustre metal in favour of US-dollars, as they look forward to fresh economic data later this week that could steer the FOMC policy decisions for the next meeting.
Copper prices gave back previous session gains as traders respond to weaker data out of China and Eurozone that suggest softer demand. Dalian Iron Ore prices remained firm for the day, though markets are measuring China’s latest policy guidelines and monitoring oversupply concerns.
Brent Crude Oil prices settled a tad lower as a firmer US-dollar and traders taking recent profits off the table dented market enthusiasm for the opening session of the month.
