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RBA Leaves Rates On Hold While Traders Wait For Bank of Japan Decision

By:
Barry Norman
Updated: Aug 24, 2015, 23:00 UTC

Wall Street posted a negative close, so Asian markets are trading mixed to positive this morning while the USD index is trading at 86.16 after making a

RBA Leaves Rates On Hold While Traders Wait For Bank of Japan Decision
RBA Leaves Rates On Hold While Traders Wait For Bank of Japan Decision
RBA Leaves Rates On Hold While Traders Wait For Bank of Japan Decision

Wall Street posted a negative close, so Asian markets are trading mixed to positive this morning while the USD index is trading at 86.16 after making a high of 86.60 during the day. US equity indices have remained choppy for most of the day but managed to close about 0.5 percent lower than last week’s close.  In terms of currencies, Asian markets are trading on a positive note to the dollar after the steep correction in the dollar index on Monday.

This seems to be different from the one just gone by as there is minimal data that is to be released. There are many speeches and conferences that are lined up this week. There would be a lot of emphasis in terms of commentary rather than data. The IMF has three conferences lined up for this week, briefing on global financial stability on Wednesday, and IMF director Lagarde debate on global economy on Thursday. For Europe we have German chancellor Merkel and French president speak about job creation. The Bank of England meets on Thursday and Bank of Japan will dominate the markets today.

Traders’ view of a stronger US dollar continues to remain unchanged for this week as well. The current situation advocates a structural change of international markets as markets come to accept the stronger dollar, and weaker commodity prices, especially that of oil which is expected to trade lower for the foreseeable future.

The euro is a different story, dipping 40 points to trade at 1.2614 this morning reacting to the recovery of the US dollar and continued weak German data. Traders remain confused over the ECB decision and statement and will closely monitor comments this week from Mario Draghi.  The euro was flat at 137.64 yen while it weakened to $1.2618 from $1.2655 in U.S. trade after weak German industrial orders for August underscored the eurozone’s economic woes.

The Japanese yen continued to ease this morning trading at 109.18. The dollar rose against the yen after the governor of the Bank of Japan said a weaker currency was a plus for the world’s number three economy. In morning trade, the greenback strengthened to 109.18 yen from 108.75 yen in New York, while investors await the end of the central bank’s two-day policy meeting later in the day. BOJ Kuroda told the Diet that the yen’s sharp drop against the dollar in recent weeks was a positive for the economy.

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The Australian dollar is down 20 points in the morning session at 0.8744 The Reserve Bank of Australia has decided to keep the nation’s interest rate at an historic low of 2.5 per cent after its October monthly meeting today. It is the 13th consecutive time that the central bank has resolved to leave its rates settings unchanged. However analysts expect the bank may begin lifting rates next year, as the falling Aussie dollar provides some relief for many Australian businesses. The New Zealand dollar followed suit dropping 44 points to trade at 0.7798 after business confidence tumbled and the US dollar climbed. Dairy prices have fallen to a new low weighing on the currency.

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