Article Highlights

  • RBA sharply cuts its inflation estimates
  • Japan’s markets are back from the holidays
  • All eyes on the NFP report
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All eyes on the NFP report! With the monster report only a few hours away, not even the return of Japanese traders from their holidays was enough to provide volatility for most of the major currencies.

Major Events:

RBA’s policy statement – Just traders think the Reserve Bank of Australia (RBA) has already done its best this week, we got another jolt from its policy statement. If you recall, the central bank had surprisingly cut its rates earlier this week, citing inflation and a bit of room from the housing market.

Well, looks like Glenn Stevens and his friends are more worried about consumer prices than we think! In its monetary policy statement, the RBA stated that it’s expecting a 1% to 2% inflation range in 2016, way lower than its 2% to 3% estimates just three months ago. Apparently, the central bank is only expecting inflation to hit the lower end of its target in 2018, where they placed their inflation estimates at 1.5% to 2.5%.

The downgrade of inflation forecasts reaffirmed the RBA’s commitment to hit its targets and hinted that the central bank isn’t done cutting its rates just yet. Not surprisingly, the prospect spooked the Aussie bulls and dragged the high-yielding currency sharply across the board.

All eyes on the NFP report – With the much-awaited U.S. non-farm payrolls (NFP) report only a few hours away, volatility was understandably tight for most of the major currencies. We saw some movement from the yen though, possibly due to Japanese traders playing catch up on the overall risk aversion that we saw while they were on consecutive holidays.

If you haven’t done your due diligence for the day yet, then you definitely should check out Forex Gump’s latest preview for the NFP release.

Major Currency Movers:

AUD – The Aussie was clobbered by its counterparts after the RBA sharply slashed its inflation forecasts.

AUD/USD is down by 73 pips (-0.98%), AUD/JPY is down by 84 pips (-1.05%), and EUR/AUD is up by 151 pips (+0.99%).

JPY – The yen gained a few pips across the board, likely thanks to Japanese traders catching up to this week’s overall theme of risk aversion.

USD/JPY slid by 8 pips (-0.08%), EUR/JPY is down by 9 pips (-0.07%), and GBP/JPY is down by 13 pips (-0.08%).

Watch Out For:

  • 7:00 am GMT: Switzerland’s foreign reserves (576B CHF previous)
  • 8:10 am GMT: Euro Zone retail PMI (49.2 Previous)
  • All eyes on today’s NFP release. Check out Forex Gump’s trading guide!

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In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!