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Forex News: Reserve Bank of Australia raised their core Interest Rate to 3.25%
Skirting widespread speculation, the Reserve Bank of Australia raised their core interest rate by a quarter basis point to 3.25%.
The move put Australia in front of all other Western nations, making them the first to raise rates amidst the current economic crisis and sent the Aussie on an upward tear through forex pairs.
The rate hike also helped spur on stock markets across the globe as optimism grew that the global economy was recovering.
At 12:05AM GMT, the Australian Dollar was trading up 1.53% against the US Dollar to a 14 month high of .8904, up 1.25% to the Euro to 1.653, up .76% against the Canadian Dollar to .9433 and up .33% versus the Japanese Yen to 79.06.
The AUD was again a star performer, rallying to re-test the 14-month highs at 0.9125 after last night’s brief setback. A few inputs helped the AUD, with a fresh uptick in gold after the Taiwan central bank said it may put more of its reserves into gold, helping sentiment. China’s trade data also had a positive effect as both exports and imports contracted less than expected in September. Exports were down 15.2% y/y versus -21.0% expected while imports shrank just 3.5% from a year ago versus -15.0% expected. The final positive input came from latest consumer confidence data which still showed an increase for October even though the survey was held after the last RBA rate hike.
Today’s action in Asia centered around the AUD with the minutes of the October 6th meeting reading generally more hawkish at the margin than anticipated. The central bank noted that the current very expansionary setting was no longer needed and possibly imprudent. It suggested that keeping interest rates as excessively low levels for an extended period could threaten hitting the inflation target over the medium-term and could result in the build-up of other imbalances in the economy. The rise in the AUD was attributed to the generally improving sentiment in financial markets, the relative outperformance of the Australian economy and the strength of commodity prices and, as a result, appeared to sanction ( or at least not decry) the strong rebound. AUD hit new marginal highs after the minutes but ran into steady selling from Japanese names.
The JPY remains the highest beta currency as the JPY crosses are reversing higher just as quickly as the sold off in recent days as the US GDP triggered a move higher in bond yields. Note that the USD/JPY found support right on the 21-day moving average, which has been an important Moving Average on several occasions over the recent cycle. For resistance, we'll watch the 91.54 retracement level and the 92.00-area daily Ichimoku cloud resistance. The JPY will need new local lows in bond yields to work back below 90.00 in the USD/JPY.
#fullpost{display:none;} The US Dollar dropped on Wednesday against most majors, after a sharp rise in equities and commodities stole the Dollar's safe-haven appeal. The downturn happened as Forex investors waited for a policy decision from the US Federal Reserve Bank.
The Fed left rates unchanged as promised, helping fuel the flow into riskier investments. On the day, the ICE futures, which measures the Dollar against a basket of 6 major currencies was down to 75, down from the month high of 76.8172.
At 12:00AM GMT, the US Dollar was down .98% to the Euro to 1.4866, down 86% to the British Pound to 1.6569, down .23% to the Canadian Dollar to 1.0628, up .86% to the Australian Dollar to .9101 and down 1% to the Swiss Franc to 1.0154. The Dollar did rise .42% against the Japanese Yen to 90.67.
The dollar fell across the board on Monday although it recovered some after the US Federal Reserve Chairman, Ben Bernanke, commented that the Fed was keeping its eye on the fluctuation in the Dollar soothing those that fear the out-of-control spiralling that the Dollar has been in for the past three months. The Fed chairman went beyond what is typical of a central bank head and spent a good portion of his speech to a private New York organization talking about the Dollar, a move that was seen as reassuring that the US will be quick to act before anything major happened to the Dollar.
At 11:38PM GMT, the US Dollar was trading down .48% to the Euro to 1.4974, down .6% to the Japanese Yen to 89.1, down .91% to the British Pound to 1.6828, down .4% to the Canadian Dollar to 1.0475, down .47% to the Aussie to .9372 and down .51% to the Swiss Franc to 1.0072.
The US Dollar continued its fall on Wednesday, after a spate of data releases increased optimism in the US for an economic recovery. Three key pieces of data were released in the last Forex trading session before the Thanksgiving holiday on Thursday and all three were better than expected.
On the jobs front the US shed less jobs in this reading than it has for over a year, this while retail sales jumps higher than anticipated and home prices increase for the fifth straight month.
Minutes were also released fro the Federal Reserves meeting in which it was revealed that the Fed as a whole saw the falling Dollar as an orderly occurrence.
All of these combined brought risk appetite back into the markets and pushed the Dollar to a sixteen month low on the ICE futures Dollar index, a non traded index which matches the performance of the Greenback to 6 major currencies.
At 10:25PM GMT, the US Dollar was trading down .91% to the Euro to 1.5088, down 1.21% against the Japanese Yen to 87.48, down .55% versus the British Pound to 1.6674, down .84% against the Canadian Dollar to 1.0489, down 1.15% to the Australian Dollar to .9293 and down .86% versus the Swiss Franc to .9998.
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Forex News: Reserve Bank of Australia raised their core Interest Rate to 3.25%
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