ECB disappoints and overshadows improved trade rhetoric

OzForex Research OzForex Foreign Exchange

AUD - Australian Dollar

The AUD opens this morning largely unchanged having enjoyed mixed fortunes through trade on Thursday. Edging higher throughout the domestic session the AUD found support in reports trade talks between the US and China were progressing well as the two economic superpowers scaled back existing tariffs while waylaying scheduled new tariffs. Edging toward 0.69 the AUD touched intraday highs at 0.6893 before profit taking and disappointment at the European Central Bank’s policy announcement forced a downturn and shift back toward 0.6875. Additional downward pressure came following an uptick in US inflation data. Underlying consumer prices jumped 0.3% in August the largest year on year gain in 12 months, back-ending an uptick in producer prices on Wednesday and forcing the AUD back nearer 0.6850.

Despite the uptick in inflationary pressure markets are still anticipating the Fed will cut rates next week in a bid to stimulate the slowdown in domestic economic growth. Expectations for a loosening of US monetary policy and improved trade rhetoric have helped the AUD hold onto recent gains and have opened the door for a break above 0.69 should risk appetite and broader optimism continue.

Attentions now turn to Friday’s US retail sales print for a deeper look into US economic performance.

Key Movers

The Euro advanced through trade on Thursday, rallying against the USD and key major crosses after the ECB failed to meet the markets dovish expectations. Having edged lower in the lead up to Thursday’s highly anticipated ECB policy meeting and minimum rate announcement the Euro lurched higher after policy makers announced a 10 basis point cut to interest rates while re-introducing quantitative easing. Markets had largely priced in the 10 basis point cut but were looking for more than the 20 billion Euro a month stimulus package. Investors were expecting the ECB to throw out everything they had in a bid to combat persistent stagflation and lacklustre growth and seemingly were left wanting. Having fallen to 1.0925 the Euro rallied through 1.10 to touch 1.1090 while key crosses suffered heavy mark downs with the AUD falling from 0.6287 to 0.6202 at time of writing.

Expected Ranges

AUD/USD: 0.6830 -0.6890 ▼

AUD/EUR: 0.6170 - 0.6190 ▼

GBP/AUD: 1.7730 -1.8130 ▲

AUD/NZD: 1.0670 - 1.0790 ▲

AUD/CAD: 0.9020 - 0.9090 ▲

Author

OzForex Research

OzForex Foreign Exchange

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

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 climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

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

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

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.