RBA deputy governor, Debelle: Coronavirus causing large increase in risk aversion, uncertainty

Ross J Burland FXStreet

The Reserve Bank of Australia deputy governor, Debelle, says coronavirus causing large increase in risk aversion, uncertainty.

Key statements

Says lower interest rates to help offset demand shock from virus.
Says recent fall in a$ will provide a helpful boost to economy.
Says government stimulus package will provide welcome support to economy.
Combined fiscal and monetary policy will help navigate a difficult period.
Says the effect of the virus will come to an end at some point.
Repeats impact of virus on tourism, education to take 0.5ppt from Q1 GDP.
Says too uncertain to assess impact of the virus beyond march quarter.
Australian banking system well capitalised, in a strong liquidity position.
Have not seen any particular sign of pressure in our daily market operations.
Liaison indicates no material disruption to exports of iron ore and coal at this stage.
Says global economy will be materially weaker in Q1 and period ahead.
China very focused on getting its economy back to full output.
Monetary policy still works.
Impact of exchange rate clearly still works.
There are scenarios where we would have to consider QE.
Would consider forward guidance and keeping bond yields down.
Would aim to keep yields low rather than set a target for bond buying.
Not a lot of stress in money market at present.

FX implications

AUD/USD has been on the backfoot since yesterday's disappointment in the NAB Business Survey and while the US dollar has taken back to the top spot n the FX board. There is nothing in here pertaining to immediate drastic measures but the market is pricing in around a 100% chance of a 25bp cut at the next RBA meeting on 7 April which is likely to continue to weigh on AUD.

AUD/USD: Under pressure around 0.6500 amid broad US dollar strength

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD struggles above 1.1500 despite USD weakness

EUR/USD struggles with its recovery above 1.1500 in European trading on Monday, despite broad US Dollar weakness and improved risk sentiment. The USD loses traction following US President Trump's call off an attack on Iran and that talks between the two sides would happen on Monday. Traders will closely monitor the developments surrounding US-Iran negotiations and US ISM PMI data.

Gold extends range play below $4,100 as rebounding USD meets receding Fed hike bets

Gold struggles to capitalize on a modest weekly bullish gap opening, and remains below the $4,100 mark heading into the European session. The US Dollar stages a modest recovery from its lowest level since June 17, which is seen capping the upside for the commodity. The upside for the USD, however, seems limited amid renewed hopes for a US-Iran peace deal and receding US Fed rate-hike expectations.

Week ahead: US payrolls report and AI earnings to keep investors on edge

After the Fed decision, NFP report awaited for more rate hike clues. Employment also on the agenda in Canada and New Zealand. Chinese trade and Japanese wage data to be watched too. But Iran and AI headlines to remain in driver’s seat for risk sentiment.

Solana risks a steeper decline below $70 despite steady ETF inflows

Solana (SOL) is trading in the red, losing bullish momentum and remaining capped below its 50-day Exponential Moving Average at $75.68. SOL-focused Exchange Traded Funds show resilience with a monthly inflow of $14.62 million in July, while the near-term retail support wanes with the funding rate turning negative.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.