12-1 Economic Calendar
AUD/USD Post Rate Decision
After an as expected rate decision moving the cash rate from 3.5% to 3.75% the AUD moved lower against the USD. The accompanying RBA meeting minutes suggested that inflation was contained and has declined off its peak and that a higher AUD will continue to hurt trade. On the daily chart below we see the pair has broken the long-term trendline we have been following and is now using it as resistance. The second chart is a shorter-term version of the daily.
RBA Rate Decision
The RBA has raised their cash rate from 3.50% to 3.75%. The market had a muted reaction to the release with the AUD trading lower against the USD. The RBA meeting minutes are as follows:
- Financial markets have improved considerably.
- Recovery is much quicker in China and the rest of Asia.
- Australian economy is in a gradual recovery.
- The rate rise is to keep inflation consistent with target.
- The board moved at recent meetings to cut stimulus.
- Public infrastructure spending is supporting demand.
- 2010 growth is in line to trend.
- There are early signs of recovery in the labor market.
- Inflation is likely to be close to its target.
- Jobless rate is to peak at a lower level than expected.
- Outlook remains similar to November statement.
- Inflation rate has declined from peak.
- Household wealth has had noticeable recovery.
- Sees moderation of inflation in near term.
- Housing credit is expanding at a solid pace.
- Sees inflation consistent with 2010 target.
- House prices have risen significantly this year.
- Rise in interest rate will have an impact on containing prices.
- The AUD rise will damp trade sector.
HSBC Manufacturing PMI
The HSBC Manufacturing PMI out of Japan was 55.7 for November; slightly higher than its October reading of 55.4. The JPY continues to gain on the back on the unscheduled BOJ policy meeting.
BOJ Alert (USD/JPY)
The BOJ has just announced an unscheduled policy meeting today to discuss economic and financial developments. As a result of this announcement and speculation on BOJ intervention already permeating the market, the USD/JPY pair jumped 50 pips to the 100 hr mavg which has defended the pairs appreciation since mid-November.
BOJ Statements
Japan’s Sakakibara comments:
- The USD may fall below 80 against the JPY by March 2010 adding that intervention will only have a short term impact.
- The effect of quantitative easing is “very limited”.
- He expects double dipped Japanese recession next year.
The BOJ’s Kan said that QE can combat inflation and that the government shares the same view as the BOJ on deflation. However, monetary policy remains in the hands of the Bank of Japan.
The JPY lost further ground against the USD on these comments trading on session highs (86.47).
Chinese Manufacturing PMI
China’s Manufacturing PMI which was expected to read 55.7 for November came in slightly lower at 55.2; equivalent to October’s reading. As a result the risk pairs traded lower, however USD/JPY maintained its bid. We are expecting the HSBC PMI reading 90 minutes from now.
EUR/JPY Better Bid After the Close
The EUR/JPY pair has caught a light bid after the close of yesterday’s trading day, even as the Nikkei and US equity futures trade marginally weaker. The pair is approaching the 100 hr mavg and short-term trendline resistance, after it broke above the trending 21 hr mavg, which had resisted the pair through the NY afternoon. We will watch the pair as it approaches the noted levels as the market awaits Chinese manufacturing releases later in the Asian session.
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