Article Highlights

  • AU MI leading index slips from 0.4% to 0.0% in January
  • AU construction work done (q/q) down by 0.2% vs. 0.5% expected, -4.4% previous
  • AU wage price index (q/q) up by 0.5% as expected, 0.4% previous
  • NZ credit card spending (y/y) up by 7.1% in January vs. 8.6% in December
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The Aussie was king of pips during the Asian forex trading session after a speech by Philip Lowe supported speculations that the RBA is done cutting its rates.

Major Events:

Speech by RBA’s Lowe – With not a lot of top-tier data on the docket, market players turned their focus on a speech by Reserve Bank of Australia (RBA) Governor Philip Lowe.

Much like the BOE, the RBA is also worried about the costs of easing its policies further. Specifically, Lowe and his gang think that ultra-low interest rates would promote too much indebtedness, which would eventually hurt consumer spending and economic growth.

It’s not that Lowe and his team are ignoring arguments for easier policies. He defended that while a high and rising unemployment rate would add the case for more stimulus, he also said that the RBA believes the labor market is “heading in the right direction.” Threats of low inflation expectations becoming self-fulfilling was also shrugged off, as the RBA didn’t see “a particularly high risk” of it in his turf.

Overall, Lowe’s speech supported the RBA’s latest statement and meeting minutes, where it hinted that it’s done with its interest rate cut season…for now. Naturally, Aussie bulls pounced at the not-so-dovish news.

Mixed trading ahead of the FOMC meeting minutes – Today at 8:00 pm GMT we’ll see the FOMC’s published meeting minutes, where the Fed is expected to sustain its hawkishness from its last two meetings.

But with recent reports from Uncle Sam showing mixed results at best and Janet Yellen not taking the opportunity to share her unambiguously hawkish stance in her latest testimony, a hawkish meeting minutes might not be a done deal. For now, some market players are choosing to stay in the sidelines.

This is probably why the dollar lost pips against its higher-yielding counterparts, while the Asian bourses capped the morning session mixed. Nikkei is down by 0.17%, Australia’s A SX 200 is up by 0.14%, the Shanghai index is down by 0.15%, while Hang Seng is up by 0.79%.

Market Movers:

AUD – The Aussie was the top dog during the Asian session, thanks to Lowe’s speech all but cementing the RBA’s not-so-dovish stance.

AUD/USD shot up by 9 pips (+0.12%) to .7692, EUR/AUD fell by 17 pips (-0.12%) to 1.3712, and AUD/NZD popped up by 12 pips (+0.11%) to 1.0732.

USD – The Greenback lost a pip or two against its major counterparts, as dollar bulls squared their positions ahead of the FOMC minutes release.

USD/JPY is down by 15 pips (-0.13%) to 113.44, GBP/USD is up by 24 pips (+0.19%) to 1.2497, and NZD/USD is up to .7169 after falling to a session low of .7155.

Watch Out For:

  • 10:00 am GMT: Swiss Credit Suisse economic expectations
  • 10:00 am GMT: German IfO business climate (109.6 expected, 109.8 previous)
  • 10:30 am GMT: U.K. second GDP estimate expected to remain at 0.6%
  • 10:30 am GMT: U.K. preliminary business investment (q/q) (0.0% expected, 0.4% previous)
  • 10:30 am GMT: U.K. index of services (0.8% expected, 1.0% previous)
  • 11:00 am GMT: Euro Zone final CPI expected to remain at 1.8%
  • 11:00 am GMT: Euro Zone final core CPI expected to remain at 0.9%
  • 12:00 pm GMT: U.K. MPC member Cunliffe to give a speech in London

See also:

U.S. Session Recap
London Session Recap

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