All trading involves risk. Losses can exceed deposits.

AUD rebounds on private sector credit jump

The greenback was mostly firmer against the majors with the exception of the AUD which finally managed to regain some ground. 

All trading involves risk. Losses can exceed deposits.

AUD/USD had been threatening to breach 0.87 but has since bounced to within striking distance of the 0.88 level which it tested in US trade. Perhaps some level of stability being restored in struggling emerging markets was responsible for the bounce in the AUD. Commodities actually remained under pressure suggesting it wasn’t a clear risk-on theme. With the Chinese Lunar New Year kicking in it’ll be interesting to see how some commodities respond to reduced activity. This could put a dampener on the AUD’s recovery in the near term. On the local economic calendar today we had PPI which came in well short of expectations at just 0.2%, while private sector credit ticked higher to 0.5%. This data pushed AUD/USD back above 0.88 with the near-term positive momentum remaining intact. Tomorrow’s manufacturing PMI out of China has the potential to cause a big move when we return to trade on Monday. The market is expecting the PMI reading to come in at 50.6 and no doubt there will be a lot of sceptics out there after the recent run of data.

Yen muted reaction to data dump

The yen has been in focus today on the back a data dump from Japan. Already we have received manufacturing PMI, household spending, CPI, the unemployment rate and industrial production data. All the CPI readings and the unemployment rate came in ahead of estimates and really showed that the Japanese economy has made significant progress. However, household spending came in below estimates showing that perhaps the saving culture in Japan is still fairly prominent.

Industrial production was also a touch weaker but this could be to do with seasonality issues. The reaction to the data was relatively muted with USD/JPY remaining sidelined at 102.75. US dollar strength had aided a recovery in the pair off its lows in the 102 region. We still have housing starts data due out later today, but I doubt this will impact the yen much. On the USD side of the equation we have Chicago PMI, personal spending/income, consumer sentiment and inflation expectations due out. Fed member Fisher is also set to speak and might give further hints on tapering.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts