Aussie slides as inflation hits 2-1/2 year low

Andrew Robinson MarketPulse

AUD/USD at six-week low

Australia’s headline CPI fell to 1.3% y/y in Q1, matching the lowest since Q3 2016, led by lower prices for petrol, travel and accommodation. This was the third consecutive quarter where price gains have been below the RBA’s 2-3% target range. The RBA’s trimmed mean CPI rose 1.6% y/y, slipping from +1.8% in Q4.

The Aussie was marked lower after the data, with AUD/USD falling as much as 0.92% to 0.7036, the lowest in six weeks, while AUD/JPY shed as much as 0.96% to a three-week low of 78.61, easily slicing through the 55- and 100-day moving averages at 79.035. Some Fibonacci support comes in at 78.432, the 23.6% retracement of the January-April rally.

AUD/JPY Daily Chart

Source: OANDA fxTrade

German sentiment seen mixed

The first German economic releases of the week sees the IFO surveys in the spotlight. The expectations index snapped a six-month weakening phase last month and economists expect that trend to continue into April. Forecasts are for a 96.1 reading from 95.6. The business climate is also expected to improve with a 99.9 reading from 99.6, but the current assessment is still seen weaker at 103.6 from 103.8.

A dovish Bank of Canada?

Given the shift in the rate outlook for the Fed this year, a number of central banks have also switched to a more dovish bias. The Bank of Canada is probably going to join this club too, amid ongoing trade tensions and a weaker outlook for the domestic economy.

The Canadian dollar has been under pressure and not even a 4% spike in oil prices has been able to support the Loonie. USD/CAD touched the highest since March 8 this morning and is now at 1.3450

USD/CAD Daily Chart

Source: OANDA fxTrade

Author

Andrew Robinson

MarketPulse

A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentar

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.