Market Brief
The RBA rate meeting took centre stage this morning as the Australian central bank surprised markets by raising interest rates to 3.25% (from 3% prior); becoming the first G20 nation to officially tighten monetary policy since the onset of the financial crisis. AUDUSD surged to new 13 month highs (currently 0.8870) as the bank highlighted it was “now prudent to begin gradually lessening stimulus”, and markets have adjusted to the prospect that a series of hikes is now likely in the coming months. Most major currencies have exploited the morning’s news to gain on the USD this morning; EURUSD is trading at 1.4740, and USDCHF down below 1.0250 as investors have relished the implication that the worst is over and others will soon follow the RBA’s lead.
The currency moves have been accentuated further by USD weakness; caused by an article in the UK’s Independent newspaper overnight that Arab states may switch to using a basket of currencies for oil trading. A move to non-USD contracts would indeed signal a big risk for the USD, but the nature of the article remains speculative and it appears that for now, simply the idea that such a move is being entertained is enough to undermine USD performance.
Overnight, the outlook appears more sanguine in the equity space as Asian indices rose for the first time in 4 days. The buoyancy came after yesterday’s US ISM Non-Manufacturing for Sep, which managed to rise above the crucial 50 level (50.9 vs. 50.0 exp.); indicating an expansion. The remainder of yesterday’s data calendar produced very little action in the FX space; PMI Services data out of Europe surprised to the upside, whilst Eurozone Retail Sales for Aug posted a better than expected -0.2% reading MoM (vs. -0.5% expected, and upward revisions to July). Confusingly YoY figures indicated a worse than expected decline (-2.6% vs. -2.4% expected), but EURUSD remained largely unchanged after the releases
The main data releases from Europe today are Swiss CPI, followed by UK Industrial Production and Manufacturing Output. Meanwhile the afternoon will see the release of Canadian Building Permits and Ivey Purchasing Managers Index.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9'691.80 | 0.18 |
| Hang Seng Index | 20'568.77 | 0.68 |
| Shanghai Index | 2'779.43 | 0.9 |
| FTSE 100 Index | 5'024.33 | 0.71 |
| DAX Index | 5'508.85 | 0.75 |
| SMI Index | 6'162.90 | 0.21 |
| S&P future | 1'036.90 | 0.05 |
| World Markets | Current Level | % Change |
| Gold | 1'020.13 | 0.28 |
| Silver | 16.88 | 1.44 |
| VIX | 26.84 | -6.24 |
| Crude wti | 70.98 | 0.81 |
| USD Index | 76.25 | -0.59 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Swi: CPI, % m/m (y/y) Sep | 0.2 (-0.7) | 0.1 (-0.8) | CHF/07:15 |
| UK: Industrial production, % m/m (y/y) Aug | 0.2 (-8.7) | 0.5 (-9.3) | GBP/08:30 |
| UK: Manufacturing output, % m/m (y/y) Aug | 0.3 (-9.3) | 0.9(-10.1) | GBP/08:30 |
| Cad: Building Permits, % m/m Aug | 5.00% | -11.40% | CAD/12:30 |
| Cad: Ivey Purchasing Managers Index, Sep | 56.2 | 55.7 | CAD/14:00 |
Currency Tech
AUDUSD
R 2: 0.8980
R 1: 0.8943
CURRENT: 0.8875
S 1: 0.8530
S 2: 0.8319
USDCAD
R 2: 1.0990
R 1: 1.0960
CURRENT: 1.0665
S 1: 1.0660
S 2: 1.0590
EURJPY
R 2. 133.89
R 1: 132.12
CURRENT: 131.15
S 1: 129.05
S 2: 127.80
USDMXN
R2: 13.845
R 1: 13.790
CURRENT: 13.573
S 1: 13.495
S 2: 13.455
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
