Summary:

  • US dollar is on the back foot as traders await the tax bill voting today
  • RBA minutes had a limited impact on the domestic currency
  • US and Asian stock markets continue their rally

It’s been outstandingly quiet FX session where the NZ dollar has been the best performing one, an increase has not been impressive though (+0.15%). It could have been caused by slightly better than expected soft indicators from the New Zealand economy. Namely, ANZ activity index grew to 15.6 from 6.5 seen in the past month, whereas ANZ business confidence decreased its November’s slide and showed -37.8. Trading the NZ dollar one cannot forget about today’s GDT milk auction (the last one this year) as it could be a potential market mover.

link do file download linkThe consumer confidence gauge points to an improvement in manufacturing PMI going forward. Source: Macrobond, XTB Research

The Australian dollar has been little changed as well despite the release of RBA minutes from the December monetary policy meeting. Here are the most important headlines:

  • recent data had increased confidence that unemployment would continue to fall, inflation rise
  • uncertain on how far and when stronger growth would feed through to wages and inflation
  • outlook for household consumption a “significant risk” given slow income growth, high debt
  • any further rise in AUD would slow expected pick-up in inflation, economy
  • board noted AUD still in range held over past two-and-a-half years
  • wage growth slower than expected in Q3, but appeared to have stabilised
  • housing markets had generally eased, especially in Sydney

There is nothing new which could have impacted the Australian dollar. Wage growth remains subdued being a drag on higher inflation which in turn limits any odds for an interest rate in the foreseeable future. It’s also worth mentioning the domestic housing market where risks subsided being another reason to keep rates on hold. On top of that the better performance of the Antipodean currencies could be a by-product of USD weakness which in turn might be on the back foot due to risks surrounding the US tax bill voting scheduled for today.

link do file download linkTechnically the AUDUSD seems to be poised to keep on its increase as the pair has already successfully tested an important support line at 0.7640. Source: xStation5

On the other hand the Asian equity markets have thrived following fresh records registered on Wall Street on Monday. The reason is still the same – expectations that the tax bill passage will make stocks’ valuation more attractive. Let’s add that Republican Senator Susan Collins said yesterday she’ll back the GOP tax bill virtually ensuring her party the number of votes necessary to pass the legislation. Whipping through the Asian stock markets one may notice that the Hang Seng (CHNComp on xStation5) has been the best one gaining over 1% thus far.