Market Watch AU – 1st February 2024
The US-dollar regained its dominance after the US Fed announced no change to its interest rate for this month and Fed Chairman Powell was careful not to commit to any proposition for rate cuts soon. The accompanying policy statement did conclude the FOMC’s tightening bias, but Powell reiterated that that it will be the further economic data that will dictate the opportunities for the timing on any easing. The major currencies are all lower against the US-dollar at the start of the Asia session and will continue to digest the statement and commentary from the Fed. The AUDUSD had already had the ‘wind sucked out its sails’ yesterday after the CPI Q4 surprised and came in lower than expected. This gives the RBA confidence to sit tight at the meeting next week for interest rates and market commentary is already suggesting that they can begin to contemplate cuts by the Q2 of the year. The AUDUSD traded down to the 0.6560’s support before the Fed announcements, but hit fresh lows as Powell signaled caution on rate cuts and their timing. The pair now looks for support around 0.6540/50 initially and is becoming bearish after multiple attempts at the 0.6620/30 level this week. On the data calendar today we get Australian Building Approvals for Dec and NAB Business Confidence Q4 as the key releases to watch.
Wall Street stocks erred lower following the US FOMC decision to keep rates on hold, emphasizing that while progress has been made, inflation risks are still a concern and no rate cuts are imminent right now. The DJI was up +0.1% for the session, while the S&P500 was lower -0.6%, and the Nasdaq was lower -1.1% for the day. Australian shares are set to take this on board and open down today as investors follow the global bourses contemplating the comments from the Fed that no rate cuts are happening too soon.
Gold prices reversed lower after the US Fed held rates on hold and Fed Chairman Jerome Powell pushed back on expectations of a rate cut as soon as the March meeting. So traders have trimmed positions for a March cut and have now shifted expectations for a May adjustment.
Copper prices added to gains, as the US-dollar slipped and closed before the US Fed decision announcement. Dalian Iron ore futures tracked lower on the day, as traders reassessed persistently weaker China factory data that is dampening sentiment for a foreseeable turnaround of their property sector.
Brent Crude prices traded lower , driven by lower economic activity in China along with a surprise lift in US Crude inventories.
| AUDUSD
Open today 0.6568 Yesterday’s Range 0.6551 / 0.6622 |
NZDUSD
Open today 0.6117 Yesterday’s Range 0.6102 / 0.6173 |
AUDNZD
Yesterday’s Range 1.0723 / 1.0768 |
| AUDEUR
Yesterday’s Range 0.6061 / 0.6095 |
AUDCNH
Yesterday’s Range 4.7098 / 4.7527 |
AUDGBP
Yesterday’s Range 0.5174 / 0.5202 |
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