CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

RBA’s dovish tone didn’t stop the Aussie from rallying

All major currencies are trading in tight ranges against the U.S. dollar as no major economic indicators on the calendar today

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
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The Reserve Bank of Australia decided not to use the last few bullets available to boost the economy by keeping interest rates on hold. Just a week ago, a rate cut looked almost a done deal when quarterly inflation dropped to 1.5%  YoY &  0.5% QoQ while core inflation at 2.1%, putting it at the lower end of the bank’s target range pf 2-3%. Thanks to China’s recent stimulus measures and improving business conditions & employment in Australia, which bought some more time for the central bank. 

The Aussie ignored dovish statement by Governor Glenn Stevens who said the board members observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand. AUDUSD rallied above 0.72 as bears were disappointed by the decision with immediate resistance of 0.7222 "50% retracement from 0.7382 – 0.7063 range".

Aside from the Aussie, all major currencies are trading in tight ranges against the U.S. dollar as no major economic indicators on the calendar today. The only piece of data worth looking at is UK construction PMI. Traders would like to know whether the positive flow of economic data releases are likely to continue as UK manufacturing growth surged to 16-month high yesterday. Bank of England who’s meeting on Thursday could possibly get Martin Weale join Ian McCafferty in voting for an immediate rate hike if data surprised to the upside. This could drive the pound against its major peers with GBPUSD breaking above 1.55 levels.

Asian equities got a boost from yesterday’s Wall Street rally as the tech heave weighted index NASDAQ closed at 15 year high and S&P 500 breached above 2,100 for the first time since August, while the Dow Jones turned into positive territory for the year.  In contrast, bond markets were impacted negatively as risk appetite for higher yield investments caused some selling in U.S. treasury bonds. Yields across the curve in Europe also spiked higher as ECB’s governing council member Ewald Nowonty noted that ECB was right to consider stepping up its QE program but had to think carefully before doing so.

European shares are looking for a higher open today, extending its rally from last month as UBS posted Q3 net profit that beat markets expectations. VW is back on the radar and likely to face selling pressure as US regulators investigate the company’s emissions levels in thousands of luxury Audis and Porches, which the German carmaker denies any wrongdoing.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.