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September 5, 2017

Aussie Gains after September RBA Decision

Aussie Gains after September RBA Decision

Housing market and September RBA decision

Aussie edged higher on Tuesday during the Asian trading session. The data on country’s current account and PMI in Chineseservice sector offered some support before the September RBA decision. AUDUSD continued upward march raising to 0.7959, while USDJPY leveled off at 109.28, losing 0.40%.
In China, the service activity index from Caixin jumped to 52.7 in August, beating median estimate of 51.8. Exports overtaking import operations in Australia led to the rise of current account surplus to A $9.6 billion in 2Q. Consensus expected the reading to come at A $8.1 billion. Reserve Bank of Australia stood pat and left the cash rate at a record low of 1.50%. Obviously Australian housing market was the primary matter of concern for September RBA decision. Its prices has been extending relentless climb due to a sort of bubble forming on it. Coming down from high temperatures should pass smoothly, with Central Bank vigilant support.

September RBA decision

US Jobs report set the tone for greenback

The US dollar index, trade-weighted rate to six major peers, fell 0.14% to 92.44. Yesterday the dollar depreciation accelerated as Friday’s lackluster employment report continued to put pressure on the US currency and investor’s has been watching closely new threats from North Korea. The volume of trade decreased due to the Labor Day celebrated in the US. The dollar came under pressure after the Labor Ministry reported on Friday that the number of jobs in the economy rose by 156 thousand in August, and the unemployment rate increased to 4.4%. Key missing data was weak wage growth, which added only 0.1% in August, undermining inflation expectations. Economists expected that the increase in the number of jobs will be 180 thousand, and unemployment will remain at the level of 4.3%. This data basically means that the Fed may decide not to raise interest rates any more this year.

Striking military progress of North Korea despite deepening isolation

Safe heavens gained in value on the risk-aversion move on the markets caused by North Korea Missile tests. The risk appetite was undue damaged after North Korea announced on Sunday that it had tested a hydrogen bomb. They plan to place it on a transcontinental ballistic missile. DPRK called the test a complete success, proving to be a more powerful than previous tests. According to the statement the detonation carried no negative impact on the environment. In response, the United States warned that anyone who threatened them or their allies would face a “large-scale” military reaction. Trump threat to stop trading with any country that conducts business with North Korea also sparked much controversy on this background.

US oil industry and Harvey Hurricane

Investors also continue to monitor the US oil market. As of Sunday, more than a week after the hurricane, 5.5% of the oil-producing capacities of the American coast of the Gulf of Mexico still produce about 96,000 barrels per day.

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