Intraday Market Thoughts

Aussie Nears 1.03 Amid Slim Easing Odds

by Adam Button
Mar 11, 2013 23:38

Quiet markets tend to boost low-volatility leveraged trades like the carry trade and that's what took place on Monday as NZD/JPY led the FX markets. A busy day on the Japanese calendar could spark increased volatility. Both Premium longs in AUDUSD, all 3 USDJPY and the single EURUSD remain in progress. Aussie money markets are pricing the RBA's cash rate to fall by only 28 bps by end of December. See our latest Premium Insights for the existing trades in progress.

The week started with a quiet tone but commodity currencies made some solid gains. The driver was a turnaround in the S&P 500 after an early decline. The index closed up 0.3% to a fresh cycle high as it continues to close-in on the 2007 record high.

The Australian dollar opened the day lower on concern about soft Chinese data but it crept higher throughout the session and closed at 1.0280.

Early in Asian trading there was a rumour that incoming BOJ Governor Kuroda could hold an emergency meeting before the scheduled April 3 meeting. It's only a rumour but it might be a clever move that would solidify his reputation as an arch-dove bent to defeating deflation.

At 2350 GMT, he could get more ammunition with the release of the domestic corporate goods price index. Expectations are for a 0.1% year-over-year decrease.

At the same time, the minutes of the February BOJ meeting will be released. With the upcoming turnover at the BOJ, the minutes are unlikely to jar the market.

The final simultaneous release is the January tertiary index, which expected to fall 0.2% m/m.

Later, at 0030 GMT, the focus shifts to Australia for the February NAB business confidence survey. With AUD nearing a cluster of resistance at 1.0300, every data point bears watching.

Confirmation hearings for the BOJ also continue today.

Act Exp Prev GMT
Dom. Corp. Goods Price Index (FEB) (m/m)
0.3% 0.4% Mar 11 23:50
Dom. Corp. Goods Price Index (FEB) (y/y)
-0.1% -0.2% Mar 11 23:50
BoJ Monetary Policy Meeting Minutes
Mar 11 23:50
NAB's Business Confidence (FEB)
3 Mar 12 0:30

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