USD in Asia
Hello to a sluggish and quiet Monday morning. Regional currency markets have been struggling to establish any clear direction so they continue to track broader USD moves. On that front, US equity markets closed flat on Friday after trading in the red much of the day. WTI oil was lower while the USD CPI for the month of January came in higher than expected which led some to believe the uptick in inflation might keep the Fed tightening bias on the table.
No magic bullet
The weekend’s meeting of G20 Finance Ministers will be the major focus this week with global growth woes likely to be the event headline. Don’t expect any magic bullet solution to appear but a policy consensus among ministers might go a long way to shoring up investors’ sentiment.
Bets on Aussie swing into black for first time since May
For the first time since last May, Aussie speculative bets have swung positive, albeit ever so slightly. The swing in sentiment is likely more about the lack of keenness towards the US dollar than outright bullishness on the Aussie, as the Fed appears to be backing off from aggressive rate hikes. However, views continue to run mixed on the Aussie. On the one hand, we have the widely held negative global economic outlook, weighing negatively on commodity currencies. While on the contrary, the recovery in iron ore prices, which gapped over 10% last week, is certainly supportive for the Aussie. Overall the market is struggling to establish any definite direction currently.
Thursday in focus
I expect the Aussie market to remain confined to the narrow ranges as locals now look toward Thursday’s important CAPEX report, as the non–mining sector result will fall under scrutiny from traders for signs of improvement.
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