US Employment Report | Current Market Sentiment

There is no trade call for the session. We will await the US Employment report later during the NY session. Yesterday during New York, the BOE vote split changed back to 9-0 with McCafferty no longer voting for a hike. Growth forecasts for 2016 and 2017 were downgraded while inflation is expected to remain below 1% til the end of the year. The pound sold off initially however downside was limited by comments that the next move in rates will be a hike not a cut. While the outcome was overall considered bearish, it didn’t come as a very big surprise to the market.

Current Sentiment:

During Asia, we saw the release of the latest Monetary Policy Statement from the RBA, which featured more of the same from the central bank. The RBA kept it’s GDP and CPI forecasts unchanged for 2016, noting that low inflation may provide scope for further easing. GDP is expected to grow 2%-3% in 2016, and underlying consumer inflation is expected to hit the 2%-3% target range in Q4 of the year. It appears the main concern in regards to Australia’s domestic economy is the uncertainly surrounding China’s ability to transition to a service oriented economy. The report stated that “The outlook for China continues to be a key source of uncertainty for the forecasts. While growth in China has been expected to slow gradually for some time, the recent bout of global financial market volatility has been characterized, in part, by concerns about the evolving balance of risks in China and the ability of the Chinese authorities to manage a challenging economic transition.”

We also saw Australia’s December retail sales miss the mark coming in unchanged from November but up 4.2% for the y/y. Expectations were for a monthly increase of 0.5%.

The AUD has traded mixed for the day, with no significant moves following the data.

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