Intraday Market Thoughts

RBA Preview & Latest Premium Insights

by Adam Button
Oct 2, 2012 0:36

The ISM manufacturing index climbed back into positive territory and gold hit the highest levels of the year on Monday. The euro was the top performer while the kiwi lagged. Todays RBA decision is a close call but the market is pointing to a rate cut. New Premium Insights have been added ahead of the RBA with special technical charts for silver weeklies. See more below.

Trading was choppy to start US trading for the week. The dollar initially slumped and that ended with a crescendo following the ISM manufacturing report. The index rebounded to 51.5 compared to 49.7 expected.

The euro reached as high as 1.2939 in the immediate aftermath of the report but fell below 1.2900 shortly afterwards. Gold rallied as high as $1791 prior to the data but drifted back toward unchanged at $1775 later.

Bernanke showed that the Fed is unlikely to have any near-term influence on the markets. In a speech, he said the Fed will keep rates low even as the economy strengthens but his words barely moved the market.

Japanese policymakers tried to jawbone forex moves. The newly-appointed economy and finance ministers said the BOJ needs to do more to fight deflation. The economy minister also said BOJ foreign bond buying was being considered. USD/JPY hit 78.15 but receded to 78.00.

The S&P 500 gained just 0.2% after climbing as high as 1.2% in early trade.

The focus now shifts to the RBA meeting. A decision comes at 0430 GMT. The Bloomberg survey shows 19 of 28 economists expecting no change but the OIS market tells a vastly different story. It is showing a 66% chance of a cut and a sizable chance of a second cut in November.

A drop in AUD will likely be more pronounced because the speculative market remains positioned for strength. Either way, expect a large AUD move.

Latest Premium Insights include charts on silver and strategy for AUDUSD, alongside ideas on oil, gold and EURUSD. Direct Access is found here: Non clients can log in here:



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