In addition to Trump’s speech, we had some important economic data out of Asia overnight. Specifically, from Australia and China. In Australia, the fourth quarter GDP came in at 1.1%. This was much stronger than 0.7% expected and more than made up for the surprise contraction of 0.5% in Q3.
Up until now almost all of the euro crosses have been stuck in strong bearish trends – especially the commodity crosses. However in recent weeks we have seen some interesting bullish patterns develop on the likes of the EUR/AUD, EUR/NZD and EUR/CAD. Whether or not these patterns develop into anything significant remains to be seen. But for the time being they all point to a potential bounce of some sort.
If you are like me, you cannot wait for the elections to be over so that we can actually concentrate on the U.S. economy again and not on politics. If you are like me, you also wouldn’t like to be heavily-exposed to the dollar in the run up to the elections. This is when some FX crosses come handy. One such pair is the NZD/JPY, though it is not entirely immune to U.S. elections, for it is considered to be a risk-sensitive FX pair.
The New Zealand dollar’s recent advance has come to a halt recently after the Reserve Bank of New Zealand suggested that interest rates may need to be cut further from their current record low of 2.0%. The NZD’s retreat has been particularly noticeable against the Australian dollar as the AUD/NZD pair has surged back above 1.0500 after dipping to as low as 1.0240.
The U.S. dollar is down today, especially against commodity currencies after the recent bounce on gold and silver, and also after the current moves in crude oil. However, we see commodity pairs in corrective waves within bigger USD trend, which is expected to resume this week--but maybe after the Fed rate decison on Wednesday.