Articles

USD/INR extends rally, investors await Fed rate decision

March 19, 2024 10:35   FXStreet   Market News  

  • Indian Rupee loses traction on Tuesday amid a stronger USD. 
  • Fed is expected to hold rates steady in the range of 5.25%–5.50% at its March meeting.
  • The US Fed interest rate decision on Wednesday will be the highlight of this week. 

Indian Rupee (INR) weakens on Tuesday on US Dollar (USD) purchases by state-run banks. The lower speculation that the US Federal Reserve (Fed) may cut interest rates in June provides some support to the Greenback and lifts the USD/INR pair. The Fed is widely anticipated to hold rates steady for a fifth straight time at its March meeting on Wednesday and maintain a data approach to ensure inflation returns sustainably to its 2% target. Nonetheless, there is still a possibility that Fed officials might reduce the number of rate cuts to two from the three rate cuts they expected earlier this year. 

Looking ahead, the US February Building Permits and Housing Starts are due on Tuesday. Investors will closely watch the US Fed interest rate decision on Wednesday and take more cues about the future trajectory of interest rates from Fed Chair Jerome Powell during the press conference. On Thursday, India’s S&P Global Manufacturing and Services PMI will be released. 

Daily Digest Market Movers: Indian Rupee remains vulnerable amid global uncertainties

  • Foreign investors purchased bonds worth about 100 billion Rupees ($1.21 billion) on a net basis in March, bringing the total net purchase to more than 375 billion Rupees in the first two months of 2024.
  • Foreign portfolio investors increased their holdings of Indian government bonds by roughly 50% since the index inclusion news less than six months ago.
  • India’s foreign exchange climbed from $6.55 billion to $625.63 billion in just two years, while Indian gold reserves rose from $569 million in 2021 to $48.4 billion this week in March 2024, according to the Reserve Bank of India (RBI).  
  • The Fed Chair Jerome Powell said earlier this month that the US central bank might cut its benchmark interest rate later this year, even though the continued progress on lowering inflation to the target “is not assured.”
  • Investors have priced in nearly 73% odds that the Fed will cut rates in July, according to the CME FedWatch Tools.

Technical Analysis: Indian Rupee remains confined in a longer-term band between 82.60 and 83.15

Indian Rupee trades on a weaker note on the day. USD/INR sticks to the range bound theme within a multi-month-old descending trend channel around 82.60–83.15 since December 8, 2023. 

From a technical perspective, the bearish outlook of USD/INR remains intact in the near term as the pair is below the key 100-day Exponential Moving Average (EMA) on the daily timeframe. However, the 14-day Relative Strength Index (RSI) returns above the 50.0 midline, indicating that further upside cannot be ruled out. 

The first upside barrier will emerge near the 100-day EMA and a psychological mark at 83.00. Further strength could draw in USD/INR bulls and inspire another upswing to the upper boundary of the descending trend channel near 83.15. A decisive break above this level will see a rally to 83.35 (high of January 2), followed by the 84.00 round figure. 

On the flip side, the initial support level for USD/INR is seen near a low of March 14 at 82.80. The key contention level is located at the lower limit of the descending trend channel at 82.60. Any follow-through selling could extend the pair’s downtrend to 82.45 (low of August 23), en route to 82.25 (low of June 1).

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.01% 0.01% 0.03% -0.02% 0.08% 0.07% 0.08%
EUR 0.00%   0.01% 0.02% -0.02% 0.10% 0.07% 0.09%
GBP -0.01% -0.02%   0.02% -0.03% 0.07% 0.05% 0.07%
CAD -0.03% -0.03% 0.00%   -0.05% 0.07% 0.04% 0.06%
AUD 0.02% 0.01% 0.03% 0.05%   0.12% 0.09% 0.10%
JPY -0.10% -0.06% -0.09% -0.08% -0.10%   0.01% 0.00%
NZD -0.06% -0.08% -0.06% -0.04% -0.09% 0.03%   0.01%
CHF -0.09% -0.10% -0.08% -0.06% -0.11% 0.00% -0.02%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Indian Rupee FAQs

The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.

Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.

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“Severe economic slowdown” comments from NZ Treasury cited as reason for NZD selling

March 19, 2024 10:17   Forexlive Latest News   Market News  

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China’s Longi says will lay off around 5% of staff, not around 30% as some media said

March 19, 2024 10:09   Forexlive Latest News   Market News  

China’s Longi Green Technology Energy is the world’s largest solar manufacturer

Overnight there were media reports the firm would cut nearly one-third of its staff as a cost-saving measure.

The firm has issued a statement confirming layoffs but putting the number much lower, at around 5% of staff.

This is better news for staff at the firm (well, for most of them) and for China-trade investors.

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Gold Price Forecast: XAU/USD awaits Bull Flag confirmation and central banks’ verdicts

March 19, 2024 10:02   FXStreet   Market News  

  • Gold price is ranging near $2,160 early Tuesday, awaiting key central banks’ decisions.
  • US Dollar stands tall amid pre-BoJ and RBA verdict caution, despite weak US Treasury yields.
  • Gold price is teasing a Bull Flag on the daily chart, as RSI turns bullish again.

Gold price is holding the previous rebounding in Asian trading on Tuesday, as buyers take a breather ahead of the upcoming key central banks’ policy decisions. The US Dollar (USD) is stretching higher amid a risk-averse market environment, shrugging off some weakness in the US Treasury bond yields.

Gold price looks to BoJ and RBA ahead of the Fed verdict

Gold price is looking to extend the week start’s upswing but a renewed US Dollar demand seems to be keeping the upside in check. Investors are flocking to safety in the US Dollar ahead of the key Bank of Japan (BoJ) and Reserve Bank of Australia (RBA) policy announcement.

The BoJ interest rate decision is likely to spike up the market volatility, as the central bank is widely expected to do away with its negative interest rate policy (NIRP) for the first time since 2016. Also, the central bank’s policy outlook will hold the key for the next direction in the USD/JPY pair.

In case, the BoJ announces an exit from its negative interest rate policy (NIRP), a USD/JPY collapse is likely to ensue, dragging the Greenback lower alongside. Gold price could subsequently benefit from the US Dollar decline. On a steady BoJ policy outcome, Gold price could come under fresh selling pressure due to the USD/JPY ‘rub-off effect’ on the US Dollar.

Meanwhile, the RBA is likely to maintain the interest rate at 4.35% for the third straight meeting on Tuesday, unlikely to have a big market impact, similar to that of the BoJ policy announcements.

However, any reaction to the BoJ and RBA policy announcements could prove temporary, as Gold traders will reposition themselves ahead of Wednesday’s critical US Federal Reserve (Fed) policy decision and the so-called Dot Plot Chart.

Gold price technical analysis: Daily chart

The short-term technical outlook for Gold price remains more or less the same, with a Bull Flag confirmation awaited on daily candlestick closing above the falling trendline resistance at $2,164.

Acceptance above the latter will trigger a fresh upswing toward the $2,190 level, above which the record high at $2,195 will be retested. The next relevant bullish targets are seen at the $2,200 threshold and the $2,250 psychological level.

The 14-day Relative Strength Index (RSI) is sitting just beneath the overbought region, near 68.00, suggesting that a fresh Gold price upswing could be in the offing.

If Gold sellers fight back control, the immediate support is seen at the previous day’s low of $2,146, below which the falling trendline support at $2,130 will come to buyers’ rescue.  

A sustained move below that level will put the March 6 low of $2,125 to the test. Further down, the key round level of $2,110 will challenge bullish commitments.

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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Gold stays afloat despite high US yields as traders focus on Fed policy

March 19, 2024 09:51   FXStreet   Market News  

  • Gold sees a modest increase, as investors watch this week’s central bank meetings.
  • Focus remains on the Federal Reserve, where a hawkish stance could potentially impact Gold prices while bolstering the US Dollar.
  • Recent US inflation data and Treasury yield resurgence, weighed on Gold prices.

Gold price registers modest gains on Monday amid a quiet session as investors brace for major central banks monetary policy decisions. Even though the Bank of Japan (BoJ), the Bank of England (BoE), and the Federal Reserve (Fed) would announce their decisions, the spotlight is on the latter. A Fed’s hawkish tilt could drive XAU/USD prices toward the $2,100.00 figure due to market participants’ aggressive short positioning on the Greenback. At the time of writing, Gold trades at around $2,160.55, which is up 0.22%.

The price of the yellow metal remains underpinned by previous speculations that the Fed will begin to ease monetary policy sooner than expected. Nevertheless, during the last week, Bullion tumbled close to 1% as inflation in the consumer and the producer side on the United States (US) surprisingly reaccelerated, spurring a jump in US Treasury bond yields. Consequently, the Greenback posted gains of more than 0.69% last week, according to the US Dollar Index (DXY) and Gold’s slumped.

Daily digest market movers: Gold holds to modest gains as US yields rise

  • On Monday, the US economic docket will featured housing data on the first two days of the week. Data from the National Association of Home Builders (NAHB) revealed that homebuilders’ confidence rose in March to its highest level since July 2023, as mortgage rates dip, on expectations that the Fed might begin to ease policy. The NAHB Market Index came at 51, up from 48 in February.
  • The US 10-year Treasury bond yield climbs two and a half basis points, up at 4.334%.
  • The latest US economic data witnessed mixed readings in business activity, making it challenging to predict the pace of the economic deceleration in the US. The labor market has shown signs of cooling, though the economy added more people to the workforce than expected while fewer people applied for unemployment benefits.
  • Given the backdrop, Fed Chairman Jerome Powell’s words in his testimony at the US Congress, suggesting that they would begin to cut borrowing costs, were justified. However, last week’s inflation figures and retail sales data triggered a repricing of Fed rate cut bets, aligning with the US central bank’s view of 75 basis points of easing toward the end of 2024.
  • The Fed’s next meeting is scheduled for March 19-20 next week. Given the latest inflation data, speculation is growing that Fed officials could eliminate one rate cut towards the end of the year, signaling they could cut rates twice in 2024.
  • According to the CME FedWatch Tool, expectations for a June rate cut stand at 58%, down from 72% a week ago.

Technical analysis: Gold buyers take a breather below $2,170

Gold’s uptrend remains in place, though the non-yielding metal remains glued to the $2,160-$2,180 area. Market participants keep the XAU/USD spot price near the bottom of the previously mentioned range, which could suggest that buyers are in charge and could drive prices toward the year-to-date (YTD) high of $2,195.15, ahead of the $2,200.00 mark.

However, the Relative Strength Index (RSI) indicator exiting from overbought conditions suggests that buyers are taking a breather. If sellers stepped in, pulling Gold’s price below $2,160.00, that would pave the way to test the December 4 high of $2,146.79, followed by the March 6 low of $2,123.80, followed by $2,100.00.

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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Japanese Yen slides to near two-week low against USD ahead of BoJ policy decision

March 19, 2024 09:49   FXStreet   Market News  

  • The Japanese Yen continues losing ground amid reduced bets for a BoJ policy pivot.
  • Hawkish Fed expectations underpin the USD and further lend support to USD/JPY.
  • Traders now look to the BoJ decision for fresh cues ahead of the FOMC meeting.

The Japanese Yen (JPY) drifts lower for the sixth straight day on Tuesday and weakens to a nearly two-week low against its American counterpart during the Asian session. Growing acceptance that the Bank of Japan (BoJ) will wait until April to exit the negative interest rate policy and the Yield Curve Control (YCC) turns out to be a key factor undermining the JPY. Apart from this, a modest US Dollar (USD) strength, bolstered by reduced bets for steep interest rate cuts by the Federal Reserve (Fed), lifts the USD/JPY pair closer to mid-149.00s.

Meanwhile, the much-stronger-than-expected pay hikes by major Japanese firms already seem to have set the stage for the BoJ to pivot away from the decade-long stimulus measures, which should act as a tailwind for the JPY. Traders might also refrain from placing aggressive directional bets and prefer to move to the sidelines ahead of the key central bank event risks. The BoJ is scheduled to announce its highly-anticipated decision in a short while from now, which will be followed by the crucial two-day FOMC monetary policy meeting starting later today.

Daily Digest Market Movers: Japanese Yen remains depressed amid bets that the BoJ will not exit its ultra-easy policy on Tuesday

  • The Japanese Yen languishes near its lowest level in over a week amid the Bank of Japan policy uncertainty, though expectations that the central bank will eventually pivot away from its ultra-easy policy settings help limit losses.
  • BoJ Governor Kazuo Ueda offered a slightly bleaker assessment of the economy last week and said that policymakers will debate whether the outlook is bright enough to phase out the decade-long massive monetary stimulus.
  • Japan’s largest union group said that the biggest companies agreed to raise wages by the heftiest in 33 years, reaffirming bets that the BoJ will soon exit the negative interest rates regime and the Yield Curve Control (YCC) policy.
  • Japan’s Finance Minister Shunichi Suzuki said that this year’s wage negotiations have yielded record-high wage growth so far and that the government will deploy various policies so that positive momentum in wages continues.
  • The hotter-than-expected US producer and consumer price data released last week forced investors to trim their bets for a more aggressive policy easing by the Federal Reserve, which continues to lend support to the US Dollar.
  • Markets are now pricing in less than three 25 basis points rate cuts in 2024 and about a 51% chance that the Fed will begin the rate-cutting cycle at the June policy meeting, down sharply from expectations at the start of the year.  
  • Bets that the Fed will keep rates higher for longer lift the yield on benchmark 10-year US government bonds to a three-week high, which adds to the USD strength and supports prospects for further move up for the USD/JPY pair.
  • Traders, however, seem reluctant to place aggressive directional bets ahead of the highly-anticipated BoJ policy decision on Tuesday, which will be followed by the outcome of the two-day FOMC meeting on Wednesday.

Technical Analysis: USD/JPY seems poised to appreciate further, bulls might now aim to reclaim the 150.00 psychological mark

From a technical perspective, the USD/JPY pair is holding above the 61.8% Fibonacci retracement level of the February-March downfall and seems poised to climb further. The constructive outlook is reinforced by the fact that oscillators on the daily chart have just started gaining positive traction. Hence, some follow-through strength towards the 149.75-149.80 horizontal barrier, en route to the 150.00 psychological mark, looks like a distinct possibility. A sustained strength beyond the latter might trigger a fresh bout of a short-covering move towards the 150.65-150.70 region before bulls aim to retest the YTD peak, around the 151.00 mark touched on February 13.

On the flip side, the 149.00 round-figure mark now seems to have emerged as an immediate support. Any further slide is more likely to attract some dip-buying and remain limited near the 148.30 region. This is followed by the 148.00 round figure, below which the USD/JPY pair could accelerate the downfall towards the 100-day Simple Moving Average (SMA), currently pegged near the 147.65 region. A convincing break below might shift the bias in favour of bearish traders and drag spot prices further towards the 147.00 mark en route to the monthly swing low, around the 146.50-146.45 region.

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.

The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

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‘Handshake’ agreement reached for US government funding deal to avert a shut down

March 19, 2024 09:45   Forexlive Latest News   Market News  

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Australian Dollar exhibits sideways movement amid muted ASX 200, RBA decision eyed

March 19, 2024 09:26   FXStreet   Market News  

  • Australian Dollar remains tepid ahead of RBA’s policy decisions on Tuesday.
  • Australian S&P/ASX 200 Index experiences thin trading activity due to market caution.
  • US Dollar strengthens as US Treasury yields improve, fueled by expectations of the Fed being hawkish for an extended period.

The Australian Dollar (AUD) hovers around the key level of 0.6550 amid subdued trading activity as market participants exercise caution ahead of the Reserve Bank of Australia’s (RBA) interest rate decision on Tuesday. Investors will closely monitor RBA Governor Michele Bullock’s press conference for further insights. The central bank is widely anticipated to maintain interest rates at their current levels.

The Australian equity market, the benchmark S&P/ASX 200 Index, has edged higher after starting the session positively, driven by gains in the energy and real estate sectors. This upward movement in the stock market may provide support for the Australian Dollar (AUD). Australia’s economy expanded less than anticipated in the fourth quarter of 2023, leading to speculation that the Reserve Bank of Australia could initiate rate cuts later this year.

The US Dollar Index (DXY) strives to extend its gains for the fourth consecutive session, bolstered by an uptick in US Treasury yields. Bond markets have experienced a sell-off following additional evidence of resilience in the United States (US) economy, compelling traders to adjust their expectations for fewer interest rate cuts this year. Investors are eagerly awaiting interest rate decisions from both the People’s Bank of China (PBoC) and the US Federal Reserve (Fed), which are anticipated to be announced on Wednesday.

Daily Digest Market Movers: Australian Dollar remains tepid on market caution

  • The ANZ-Roy Morgan Australian Consumer Confidence index, which is published weekly, stands at 81.7, compared to the previous week’s reading of 82.2.
  • According to Bloomberg, Westpac anticipates the Reserve Bank of Australia could maintain its cash rate at 4.35% at Tuesday’s meeting.
  • ANZ Bank analysts anticipate that the Reserve Bank of Australia (RBA) will maintain a “mild tightening bias,” with no adjustment to interest rates.
  • China’s Retail Sales (YoY) increased by 5.5% in February, against the expected 5.2% and 7.4% prior.
  • Chinese Industrial Production (YoY) rose by 7.0%, compared to the market expectation of a 5.0% figure in February and 6.8% previous reading.
  • According to the CME FedWatch Tool, the probability of a rate cut in March stands at 1.0% and 8.7% for May. The likelihood of a rate cut in June and July is lower, at 55.1% and 73.7%, respectively.
  • The preliminary US Michigan Consumer Sentiment Index for March decreased to 76.5, from the previous reading of 76.9. This decline comes in contrast to expectations of it remaining unchanged.
  • The Board of Governors of the Federal Reserve released Industrial Production (MoM), which increased by 0.1% in February, against the expected reading of flat 0.0% and from the previous decline of 0.5%.
  • The US Core Producer Price Index (PPI) remained consistent with the rise of 2.0% year-over-year in February, maintaining its position above the 1.9% expected. The monthly report showed an increase of 0.3% against 0.5% prior, exceeding the expected 0.2% reading.
  • US PPI (YoY) increased by 1.6% in February, surpassing the expected 1.1% and 1.0% prior. PPI (MoM) rose by 0.6% above the market expectation and the previous increase of 0.3%.

Technical Analysis: Australian Dollar maintains position near the major level at 0.6550

The Australian Dollar remains close to the significant threshold of 0.6550 On Tuesday. A breach below this level might prompt downward momentum for the AUD/USD pair, with additional support anticipated around the 61.8% Fibonacci retracement level of 0.6528, and thereafter at the psychological support level of 0.6500. On the upside, the AUD/USD pair could encounter resistance near the nine-day Exponential Moving Average (EMA) at 0.6571, followed by the psychological hurdle at 0.6600.

AUD/USD: Daily Chart

Australian Dollar price today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.03% 0.06% 0.08% 0.11% 0.12% 0.17% 0.11%
EUR -0.03%   0.02% 0.04% 0.08% 0.09% 0.12% 0.08%
GBP -0.04% -0.01%   0.02% 0.06% 0.06% 0.09% 0.05%
CAD -0.08% -0.04% 0.00%   0.03% 0.05% 0.09% 0.04%
AUD -0.09% -0.08% -0.06% -0.04%   0.02% 0.08% -0.02%
JPY -0.13% -0.07% -0.07% -0.06% 0.01%   0.06% 0.00%
NZD -0.14% -0.11% -0.09% -0.06% -0.03% -0.01%   -0.05%
CHF -0.10% -0.07% -0.05% -0.03% 0.01% 0.02% 0.07%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate, and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

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China’s Foreign Minister: Ready to work with New Zealand on upgraded version of the free trade agreement

March 19, 2024 09:26   FXStreet   Market News  

Chinese Foreign Minister Wang Yi, during his visit to New Zealand on Tuesday, said that “China is ready to work with New Zealand to implement an upgraded version of the China-New Zealand free trade agreement.”

Additional quotes

Two sides should launch negotiations on negative list of service trade as soon as possible, so as to push bilateral cooperation to a new level.

China-New Zealand relations maintain a leading position among China’s relations with developed countries.

Market reaction

Despite the upbeat headlines, NZD/USD is losing 0.17% on the day to trade at 0.6071, as of writing.

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General Market Analysis 19/03/2024

March 19, 2024 09:21   ICMarkets   Market News  

US Stocks and Yields Rally Ahead of Fed – Nasdaq up 0.8%

US Stocks rallied on Monday with the usual tech names leading the way despite yields also pushing higher in anticipation of a more hawkish Fed. The Dow rose 0.2%, the S&P gained 0.63% and as usual in the current environment, the Nasdaq led the way closing up 0.82% on the day. The dollar pushed higher against most of the majors as US treasury yields took another step up to hit 3-week highs, the 2-year back up to 4.751% and the benchmark 10-year rising another 5 basis points to 4.348%. Oil prices jumped on updates that exports were down in Saudi Arabi for a second month running, Brent rising 1.8% to $86.89 per barrel and WTI up 2.1% to $82.72 per barrel. Gold remained in recent ranges, rising 0.2% back to $2,164 per ounce despite the higher dollar elsewhere.

APAC Central Banks in Focus

This week’s big risk events kick off today in the Asian trading session with both the Reserve Bank of Australia and the Bank of Japan set to announce rate decisions. The RBA is widely expected to keep rates on hold at 4.35% today and the focus for investors will be on the message that the markets receive from Governor Michelle Bullock on whether we will see rates come down in the coming months. Likely to see much more interest in the market is the BOJ which could end 8 years of negative interest rates today, marking Japan’s first-rate hike in 17 years. Traders are expecting to see plenty of volatility across Japanese markets around the event and Yen traders are bracing for a very busy afternoon.

The Trading Calendar Kicks Off the Week Today

The event calendar kicks off in earnest today with rate calls from both the Bank of Japan and the Reserve Bank of Australia in the Asian session and tier 1 data releases scheduled later in the day. The Reserve Bank of Australia is scheduled to deliver its call and associated statements etc at 2.30 pm Sydney time, however as usual there is no set time for the Bank of Japan’s announcement – and there is even the possibility that both key updates could come out around the same time. The London session should see smoother trading conditions with little due out, but investor focus will be north of the border on the New York open with the release of key Canadian CPI data. The expectation is for a 0.6% month-on-month increase for the headline number and for the Median year-on-year to remain at 3.3%. US Building Permits and Housing Start data is also due out but expect the Canadian inflation number to dominate newswires at the time.

The post General Market Analysis 19/03/2024 first appeared on IC Markets | Official Blog.

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PBoC sets USD/CNY reference rate at 7.0985 vs. 7.0943 previous

March 19, 2024 09:21   FXStreet   Market News  

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China’s Foreign Min says ready to work with New Zealand on upgraded Free Trade Agreement

March 19, 2024 09:09   Forexlive Latest News   Market News  

more to come

China ready to work with New Zealand to implement upgraded version of
the China-New Zealand free trade agreement

Two sides should launch negotiations on negative list of service
trade as soon as possible, so as to push bilateral cooperation to a
new level

China-New Zealand relations maintain a leading position among china’s
relations with developed countries

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