Short AUD Against Weaker Currencies

Posted On 22 Oct 2015

Tag: AUD

With news hitting about Commonwealth Bank we could see the AUD pressured for the session. We would look to short AUD against weaker currencies. We will also be looking ahead to the ECB and any opportunities that may arise from the tone, or any changes to the current stimulus program.

Current Market Sentiment:

The highlight of yesterday’s NY session was the Bank of Canada rate decision. The Overnight Target Rate was left unchanged at 0.5% as widely expected and the statement itself contained little new information. The CAD did however see weakness as a result of downward revisions to growth forecasts for 2016 and 2017, as well as a move lower in WTI after the EIA showed a larger than expected build in crude stockpiles. Oil prices fell to 3 week lows on the report.

The Asian session was mostly quiet on the data front. We did however see the release of the NAB Quarterly Business survey. While business confidence came in soft, the report was otherwise fairly upbeat.

Asian equities have been trading mixed on the session with the Nikkei, Topix, and Hang Seng currently lower, while the Shanghai Composite and ASX are holding onto slight gains.

In recent news, Commonwealth Bank, Australia’s biggest mortgage lender, has raised its standard variable home loan rate by 0.15 of a percentage point. This will likely cause speculation to mount that the RBA will need compensate by cutting the official cash rate in order to get lending rates back down to where they were for the retail level.

Coming up we have the ECB Rate Decision and Press Conference. ECB President Draghi is widely expected to keep the door open for more monetary stimulus in the face of deflation risks, but is seen stopping short of taking new policy steps at today’s meeting. Take a look at he weekly news events overview here in order to learn more about interpreting these particular data points

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