Good morning from Hamburg and welcome to the Varengold Daily FX Report. New Zealand Q2 producer prices rose 5.6%, much more than the 2.6% increase expected by economists. This development is the fastest pace in more than 20 years. However we wish you a nice day and good luck in trading.
The RBA saw a case to reduce interest rates earlier to head off a deeper slowdown in the economy, even if inflation remained high. AUD decreased to its day’s low of 0.8634 but recovered quickly back to 0.8672 as the meeting of RBA gave a little sign of whether they will open for a 25-bp or 50-bp rate cut next month. The AUD/JPY also fell down to a low of 94.78 and bounced back to 95.20.
Market review
Platinum lost over 5%, falling to its lowest level since the beginning of August as weaker gold and oil prices spark another round of selling. The spot platinum price went down to a low of 1,310 an ounce. The fall in commodities is helping support the dollar index. The USD/JPY is down 0.3% to a low of 109.80 while the EUR/JPY slipped pips to 161.70. The EUR/USD also dipped along with gold, while some margin traders keep unwinding positions placed that were betting that the global economy would hold up better from the US slowdown. The EUR/USD lost about 10 pips from the late US trade to a low of 1.4686. It is falling back near its 6-mth low of 1.4645. The one month correlation among EUR/USD and gold is +0.98 vs. a one year correlation of +0.86. That’s showing a stronger near-term linkage.The RBA saw a case to reduce interest rates earlier to head off a deeper slowdown in the economy, even if inflation remained high. AUD decreased to its day’s low of 0.8634 but recovered quickly back to 0.8672 as the meeting of RBA gave a little sign of whether they will open for a 25-bp or 50-bp rate cut next month. The AUD/JPY also fell down to a low of 94.78 and bounced back to 95.20.
