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Market Trading News and Research from 18 April 2024
| Raw materials | Closed | Change, % |
|---|---|---|
| Silver | 28.201 | 0.31 |
| Gold | 2361.58 | -0.91 |
| Palladium | 1027.13 | 1.29 |
Japan’s top currency diplomat Masato Kanda said on Thursday that the G7 statement reconfirmed commitment on forex on the back of the stance put forward by Japan.
He added that he “won't comment on forex levels."
Related reads
- BoJ’s Noguchi: Focus now is on the pace at which the policy rate will be adjusted
- USD/JPY remains below 154.50 amid weaker US Dollar
- Australian Dollar appreciates as the ASX 200 Index continues to gain ground on Thursday.
- Australia’s Employment Change came in at -6.6K and the Unemployment Rate increased by 3.8% in March.
- US President Joe Biden calls for tripling the existing 7.5% tariff rate on Chinese steel and aluminum.
- The decline in the US Treasury yields contributes to pressure to undermine the US Dollar.
The Australian Dollar (AUD) continues to gain ground on the second consecutive day on Thursday. The decline in the US Dollar (USD) contributes support for the AUD/USD pair. However, the mixed Australian employment data appears to exert downward pressure on the AUD.
The Australian Dollar gains momentum as the ASX 200 Index continues to climb on Thursday. The domestic equity market is bolstered by gains in mining stocks, supported by firmer metals prices. This positive momentum persists despite US stocks extending losses overnight amidst concerns that the Federal Reserve (Fed) may delay rate cuts further into the future.
The US Dollar Index (DXY) loses ground. primarily influenced by subdued US Treasury yields. This correction in the US Dollar is further reinforced by renewed selling pressure and an overall risk-on sentiment in the market. Investors watch for the release of weekly Initial Jobless Claims and Existing Home Sales later on Thursday, which could provide further insight into the state of the US economy and potentially impact the direction of the US Dollar.
Daily Digest Market Movers: Australian Dollar extends gains amid mixed labor data
- Australia’s Employment Change posted a reading of -6.6K for March, against the expected 7.2K and 117.6K prior.
- Australia’s Unemployment Rate increased by 3.8% in March, lower than the expected 3.9% but higher than the previous reading of 3.7%.
- US President Joe Biden spoke at the heart of the American steel industry in Pittsburgh on Wednesday, emphasizing the need for increased pressure on the Chinese steel sector. He has directed US Trade Representative Katherine Tai to consider tripling the current 7.5% tariff rate on Chinese steel and aluminum, as reported by CBS News.
- Federal Reserve Bank of Cleveland President Loretta Mester, speaking on Wednesday, acknowledged that inflation has exceeded expectations, and the Fed needs further assurance before confirming the sustainability of 2% inflation. She also stated that monetary policy is well-positioned, with the possibility of a rate cut if labor market conditions worsen.
- Fed Governor Michelle Bowman commented on Wednesday that progress in inflation is slowing, with a potential stall. Bowman also noted that monetary policy is currently restrictive, and its sufficiency will be determined over time.
- The Federal Reserve's Beige Book survey of regional business contacts indicates that the US economy has "expanded slightly" since late February. Furthermore, firms reported facing increased challenges in passing on higher costs.
- US Building Permits (MoM) fell to 1.458 million in March, compared to the expected 1.514 million and 1.523 million prior. Housing Starts declined to 1.321 million MoM from 1.549 million, falling short of the expected 1.480 million.
Technical Analysis: Australian Dollar hovers around the major level of 0.6450
The Australian Dollar traded around 0.6440 on Thursday. The 14-day Relative Strength Index (RSI) suggests a bearish sentiment for the AUD/USD pair as it remains below the 50 level. Key resistance for the pair is anticipated at the 23.6% Fibonacci retracement level of 0.6449, coinciding with the significant level of 0.6450. A breach above this level could strengthen the pair's momentum, potentially testing the nine-day Exponential Moving Average (EMA) at 0.6475, followed by the psychological barrier of 0.6500. On the downside, notable support is identified at the psychological level of 0.6400. A breach below this level might increase downward pressure on the AUD/USD pair, potentially leading it towards the major support level at 0.6350.
AUD/USD: Daily Chart
Australian Dollar price in the last 7 days
The table below shows the percentage change of the Australian Dollar (AUD) against listed major currencies today. The Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.62% | 0.59% | 0.52% | 0.91% | 0.71% | 0.86% | -0.31% | |
| EUR | -0.62% | -0.05% | -0.10% | 0.29% | 0.05% | 0.24% | -0.93% | |
| GBP | -0.59% | 0.03% | -0.10% | 0.33% | 0.12% | 0.24% | -0.89% | |
| CAD | -0.51% | 0.10% | 0.07% | 0.42% | 0.20% | 0.35% | -0.83% | |
| AUD | -0.93% | -0.31% | -0.33% | -0.40% | -0.09% | -0.05% | -1.22% | |
| JPY | -0.75% | -0.10% | -0.13% | -0.24% | 0.22% | 0.14% | -1.02% | |
| NZD | -0.90% | -0.24% | -0.28% | -0.35% | 0.05% | -0.17% | -1.18% | |
| CHF | 0.29% | 0.92% | 0.89% | 0.82% | 1.22% | 1.01% | 1.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate, and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Bank of Japan (BoJ) board member Asahi Noguchi said on Thursday that the “focus now is on the pace at which the policy rate will be adjusted and at what level it will eventually stabilize.”
Additional quotes
Long-term neutral interest rate is highly likely to be lower than that of other countries.
At some point in future, it's desirable to start shrinking BoJ’s balance sheet.
Steps BoJ decided in march is a move toward this direction of future shrinking of BoJ's balance sheet.
I dissented to BoJ’s March decision since I thought it would be appropriate to maintain JGB buying under negative rate.
Rise in service prices not driven mainly by wage hikes yet.
Japan's economy in moderate recovery trend but growth stalling recently.
- USD/JPY continues to decline as the US Dollar correction exerts pressure on the pair.
- Japan's CPI data is scheduled to be released on Friday, expecting a moderation in consumer prices for March.
- US President Joe Biden calls for a tripling of tariffs on Chinese steel and aluminum.
USD/JPY extends its losses for the second successive session, trading around 154.30 during the Asian hours on Thursday. The decline in the US Dollar (USD) exerts pressure on the USD/JPY pair. The Japanese Yen (JPY) might have received support from Japan's trade balance shifting to a surplus in March.
Japan’s Merchandise Trade Balance Total improved to ¥366.5 billion surplus from the previous deficit of ¥377.8 billion. Additionally, the Japanese Yen could have strengthened due to safe-haven inflows, likely prompted by risk aversion amid heightened geopolitical tensions in the Middle East.
US President Joe Biden addressed the American steel industry hub in Pittsburgh on Wednesday, advocating for heightened pressure on the Chinese steel sector. He has urged US Trade Representative Katherine Tai to explore the possibility of tripling the existing 7.5% tariff rate on Chinese steel and aluminum, according to CBS News. This development could potentially benefit the Japanese market and provide support for the Japanese Yen (JPY).
Traders anticipate the release of Japan's National Consumer Price Index (CPI) data by the Statistics Bureau of Japan on Friday, with market expectations leaning towards a moderation in consumer prices for March.
On the other hand, the expectation of the Federal Reserve (Fed) maintaining elevated interest rates for an extended period, supported by a robust US economy and persistent inflation, serves as a counterbalance to the downward pressure on the USD/JPY pair.
Federal Reserve Bank of Cleveland President Loretta Mester addressed on Wednesday, noting that inflation surpasses expectations and that the Fed requires more assurance before confirming the sustainability of 2% inflation. She added that monetary policy is well-positioned, with a potential rate cut if labor market conditions deteriorate.
Additionally, Federal Reserve (Fed) Governor Michelle Bowman remarked that progress in inflation is slowing, potentially stalling altogether. Bowman also mentioned that monetary policy is presently restrictive, and time will determine if it is adequately so.
The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Tuesday at 7.1020 as compared to the previous day's of 7.1025 and 7.2281 Reuters estimates.
- GBP/USD edges lower to 1.2450 in Thursday’s early Asian session.
- Further easing in UK inflation data prompted the expectation that the BoE will start lowering interest rates this year.
- Fed Chair Jerome Powell said he will wait longer than previously expected to cut rates after unexpectedly upside inflation readings.
The GBP/USD pair trades on a softer note around 1.2450 during the early Asian trading hours on Thursday. The softer UK inflation data prompted the expectation that the Bank of England (BoE) will start lowering interest rates in the coming months, which weighs on the Pound Sterling (GBP) against the Greenback. Investors will take more cues from the US weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, the CB Leading Index, and Existing Home Sales, due on Thursday.
The BoE hinted that the UK is still on course for an interest rate cut, as recent data showed a further easing in the pace of price growth in the economy. On Wednesday, the Office for National Statistics (ONS) showed that the UK Consumer Price Index (CPI) inflation dropped to 3.2% in the 12 months to March, the softest level for two-and-a-half years. The figure was down from the previous reading of 3.4%. However, investors expect the first rate cut in August or September, according to the LSEG data.
On the USD’s front, the upbeat February's Retail Sales earlier this week suggested a robust economy in the United States. The report triggered speculation that the Federal Reserve (Fed) might delay its easing cycle this year. The Fed Chair Jerome Powell stated that he will wait longer than previously expected to cut rates after unexpectedly upside inflation readings. Powell added that the US central bank will likely take more time to gain confidence that price growth is headed toward the Fed’s 2% target before lowering borrowing costs. This, in turn, provides some support to the Greenback and caps the upside of the GBP/USD pair.
| Index | Change, points | Closed | Change, % |
|---|---|---|---|
| NIKKEI 225 | -509.4 | 37961.8 | -1.32 |
| Hang Seng | 2.87 | 16251.84 | 0.02 |
| KOSPI | -25.45 | 2584.18 | -0.98 |
| ASX 200 | -6.9 | 7605.6 | -0.09 |
| DAX | 3.79 | 17770.02 | 0.02 |
| CAC 40 | 48.9 | 7981.51 | 0.62 |
| Dow Jones | -45.66 | 37753.31 | -0.12 |
| S&P 500 | -29.2 | 5022.21 | -0.58 |
| NASDAQ Composite | -181.88 | 15683.37 | -1.15 |
| Pare | Closed | Change, % |
|---|---|---|
| AUDUSD | 0.64351 | 0.49 |
| EURJPY | 164.66 | 0.29 |
| EURUSD | 1.06703 | 0.51 |
| GBPJPY | 192.201 | -0.01 |
| GBPUSD | 1.24547 | 0.21 |
| NZDUSD | 0.59143 | 0.56 |
| USDCAD | 1.37695 | -0.38 |
| USDCHF | 0.91042 | -0.26 |
| USDJPY | 154.327 | -0.22 |
FOREIGN EXCHANGE MARKET NEWS
CURRENCY MARKET DEFINITION
The concept of currency market has several definitions:
- Currency market is the sphere of economic relations that are manifested in the purchase and sale of currency values (foreign currency, securities in foreign currency), as well as operations related to the investment of capital in foreign currency;
- Currency market is a financial center where currency purchase and sale transactions based on supply and demand for them are concentrated;
- Curency market is a whole of authorized banks, investment companies, brokerages, exchanges, and foreign banks that perform foreign exchange operations.
- Currency market is a whole of communications systems that link banks in different countries that conduct international currency transactions.
Simply put, currency market is the market where currency transactions are made, that is, the currency of one country is exchanged for the currency of another country at a certain exchange rate. The exchange rate is the relative price of currencies of two countries or the currency of one country expressed in another country's monetary units.
Currency market is part of the global financial market, where many operations related to the global movement of capital take place.
TYPES OF MARKETS. RUSSIAN AND INTERNATIONAL CURRENCY MARKETS
There are international and domestic currency markets.
Domestic currency market — is a market within a single country.
The international currency market — is a global market that covers currency markets of all countries in the world. It does not have a specific site where trading is carried out. All operations within it are carried out through a system of cable and satellite channels that link the world's regional currency markets. Regional markets today include the Asian (with centers in Tokyo, Hong Kong, Singapore, and Melbourne), the European (London, Frankfurt am Main, and Zurich), and the American (New York, Chicago, and Los Angeles) markets.
Currency trading on the international currency market is carried out on the basis of market exchange rates, which are set on the basis of supply and demand in the market and under the influence of various macroeconomic data. Forex is the international currency market.
Currency markets can also be divided into exchange and over-the-counter markets. Exchange currency market is an organized market where trading is carried out through an exchange—a special company that sets trading rules and provides all the conditions for organizing trading under these rules.
Over-the-counter currency market — is a market where there are no certain trading rules, and purchase and sale operations are not linked to a specific place of trade, as opposed to the case of an exchange.
As a rule, an over-the-counter currency market is organized by special companies that provide services for the purchase and sale of currencies, which may or may not be members of the currency exchange. Trading operations in this market are now carried out mainly via the Internet.
The over-the-counter currency market is much larger than the exchange market in terms of trading volume. The Forex international over-the-counter currency market is considered the most liquid in the world. It operates around the clock in all financial centers of the world (from New York to Tokyo).
CURRENCY MARKET FUNCTIONS
Currency market— is the most important platform for ensuring the normal course of all global economic processes.
The main macroeconomic functions of the currency market are:
- creating conditions for the subjects of foreign exchange relations to make timely international current and capital payments and thereby promoting the development of foreign trade;
- providing conditions and mechanisms for the implementation of monetary and economic policy of the state;
- diversifying foreign exchange reserves;
- forming the exchange rate under the influence of supply and demand;
NEWS IMPACT
Various currencies are the main trading tool in the currency market. Exchange rates are formed under the influence of supply and demand in the market.
In addition to that, currency rates are influenced by many fundamental factors related to the global economic situation, events in national economies, and political decisions.
News about these factors can be found in various sources:
- Reports showing a country´s level of economic development.
The more stable an economy is developing, the more stable its currency is. Accordingly, it is possible to predict how the currency will behave in the near future, based on statistical data published in official sources of countries with a certain regularity.
This data includes:
- GDP
- unemployment;
- return on equity;
- consumer price index;
- industrial price index;
- propensity to consume;
- salaries outside of the agricultural sector;
- residential construction, etc.
Interest rate level, set by national authorities regulating credit policy, is an equally important indicator. In the European Union, this is ECB–the European Central Bank, in the US, this is the Federal Reserve System, in Japan—the Bank of Japan, in the UK—the Bank of England, in Switzerland—the Swiss national Bank, etc.
The interest rate level is determined at meetings of the national central bank. Then, the decision on the rate is published in official sources. If the central bank of a country reduces the interest rate, the money supply in the country increases, and the national currency depreciates against other world currencies. If the interest rate increases, the national currency will strengthen.
- Speeches of country leaders, leading economists and analysts.
A speech or even a separate statement by a country's leader can reverse a trend. Speeches on these topics may change the currency exchange rate:
- analysis of the situation on the currency market;
- changes in monetary or economic policy;
- adoption of a budget policy;
- forecasts of the economic situation, etc.
All this news is published in various sources. Major international news is more or less easy to find in Russian, but news related to the domestic economic policy and the economy of foreign countries is much less common in the Russian press. Mostly, such news is published by the national media and in the language of the country where the news is published.
It is very difficult for one person to follow all the news at once, and they are likely to miss some important event that can turn the whole situation on the market upside down. Guided by our main principle—to create the best trading conditions for our customers—we try to select the most important news from all over the world and publish them on our website.
The TeleTRADE Department of Analytics monitors news on most national and international news sources on a daily basis and identifies those that can potentially affect exchange rates. These are the main news items that are included in our news feed.
In addition, all our clients have free access to the Dow Jones news feed. This is a joint project of Dow Jones Newswires, the world's largest news agency, and the leading Russian news agency Prime-TASS. The news feed is created specifically for currency traders and those who are interested in getting information about the world's currency markets.
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