There have been some reassuring reactions seen on markets during the beginning of today’s trading as all the European equity markets have started with quite rosy moods and the US dollar has crept higher playing down another possible launch of an ICBM by North Korea. However, things have changed moderately since then. Namely, the stock markets across Europe have wiped out some of their earlier gains with the FTSE100 (UK100 on xStation5) slipping under the breakeven line.
As far as the FX market is concerned, swings have been quite contained. Whipping through the G10 basket one could notice that there is no consistency as risk-related currencies such as AUD and NZD gain against the greenback along with the Japanese yen being treated as the safe haven. The British pound is slightly rising as well even as services PMI surprised to the downside in August. Moreover, the Canadian dollar is gaining momentum chiefly due to rising oil prices. Let us point out that WTI prices are increasing 1.3% while their European counterpart (Brent) is going up just 0.5%. As a result, the spread, which has widened of late because of the hurricane Harvey’s ramifications, is slowly shrinking.
After a hefty sell-off seen at the beginning of the week, all virtual currencies are trying to recoup their losses. Let’s remind that a rout came in the aftermath of the Chinese central bank’s report where it called initial coin offerings (ICOs) illegal. Having assumed that the worst is already behind us, an encouraging trade idea can be found on Dash (DSHUSD) which managed to maintain above an important support zone at around $280. On the other hand, the price has broken a 50% retracement of the latest big leg higher, hence cautiousness is warranted.
The RBA was not expected to change interest rates so today’s decision comes as no surprise. The question was if the central bank could use somewhat stronger domestic data to argue for higher interest rates in the future, especially amid similar moves made by other central bankers. This was not the case. Although RBA president Philip Lower underlined economic improvement on a global scale and saw some positive developments in the Australian economy, he also stressed that appreciating AUD would complicate reaching growth and inflation goals.
A second day of the week does not abound in many crucial macroeconomic releases but we have some central banks’ speakers who could bring more volatility to the FX market. Moreover, the US is already back after the Labor Day, hence liquidity should be higher during afternoon. Let us come forth with the most noteworthy events for the rest of the day.