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FOREX: A$ Up On Hawkish RBA Hold, But Moves Modest Ahead of US Election

FOREX
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The USD is mixed against the majors in the first part of Tuesday trade. The BBDXY index is little changed, last near 1258.65. Yen has weakened a touch, while AUD is up modestly (as the RBA left rates on hold, but kept hawkish language). NZD is also up a touch. 

  • AUD/USD is tracking back towards 0.6600, so up around 0.15% in latest dealings. As expected the RBA kept rates on hold, although with hawkish rhetoric. The central bank needs to vigilant to upside inflation risks and is not ruling anything in or out.
  • OIS is slightly firmer for Australia and this is likely helping the A$, although outperformance is modest. RBA Governor Bullock noted that the current policy settings are correct and that the path back lower for inflation will be slow.
  • NZD/USD is up a touch to 0.5980. We had a better Caixin services PMI print in China, aiding to recent positive China economic momentum. This has helped China and HK equities, a likely positive for the antipodean currencies.
  • Still, aggregate moves are modest, with overnight vols very elevated ahead of US election outcomes tomorrow.
  • USD/JPY is drifting higher, last near 152.45/50, off around 0.20% in yen terms. US yields are up a touch, but gains are less than 1bps at this stage.
  • The above equity moves may be weighing on yen crosses at the margin. AUD/JPY is back to 100.55/60, still within recent ranges.
  • Later US October services ISM/PMI and September trade print, as well as UK October services/composite PMIs. The eurogroup meeting continues and the ECB’s Lagarde and Schnabel speak.

 

 

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The USD is mixed against the majors in the first part of Tuesday trade. The BBDXY index is little changed, last near 1258.65. Yen has weakened a touch, while AUD is up modestly (as the RBA left rates on hold, but kept hawkish language). NZD is also up a touch. 

  • AUD/USD is tracking back towards 0.6600, so up around 0.15% in latest dealings. As expected the RBA kept rates on hold, although with hawkish rhetoric. The central bank needs to vigilant to upside inflation risks and is not ruling anything in or out.
  • OIS is slightly firmer for Australia and this is likely helping the A$, although outperformance is modest. RBA Governor Bullock noted that the current policy settings are correct and that the path back lower for inflation will be slow.
  • NZD/USD is up a touch to 0.5980. We had a better Caixin services PMI print in China, aiding to recent positive China economic momentum. This has helped China and HK equities, a likely positive for the antipodean currencies.
  • Still, aggregate moves are modest, with overnight vols very elevated ahead of US election outcomes tomorrow.
  • USD/JPY is drifting higher, last near 152.45/50, off around 0.20% in yen terms. US yields are up a touch, but gains are less than 1bps at this stage.
  • The above equity moves may be weighing on yen crosses at the margin. AUD/JPY is back to 100.55/60, still within recent ranges.
  • Later US October services ISM/PMI and September trade print, as well as UK October services/composite PMIs. The eurogroup meeting continues and the ECB’s Lagarde and Schnabel speak.