Market Review for April 05, 2016
During the Asian session the financials market were characterize by a rather pessimistic tone and risk aversion. JPY is highly benefited on that and currently the USDJPY is trading at 110.45 area. Recent talks regards Fed’s rate talk as well as oil price drop decrease investors risk appetite again. Nonetheless Boston FED president Eric Rosengren said that if the market reacted too pessimistic on FED hike comments and that if the incoming data continue to show a moderate recovery he believes it will likely be appropriate to resume the path of gradual tightening sooner than is implied by financial-market futures.
In the key event of Asian session RBA left the cash rate unchanged at 2.00% as widely expected. RBA maintained that “there were reasonable prospects for continued growth in the economy, with inflation close to target”. Furthermore, the continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand. AUDUSD is now trading near 0.7566 area coming down from 0.7630 after the announcement.
In Japan comments were made by BOJ Kuroda were he told parliament that for now, the effect of negative interest rates is very strong so we’d like to steadily proceed with this policy. He also commented the need to take a comprehensive look at various factors in deciding what currently is the best mix of steps given the recent market moves, particularly those in Japan. Kuroda said that BOJ won’t necessarily choose a rate cut just because it’s easier to do so. Regarding the economy, despite of the weak Tankan survey result, Kuroda maintained that it’s recovering moderately.
In early European session we had the German Factory Orders m/m missing the estimation of 0.5% and announced at -1.2% also the UK’s Services PMI came in at 53.7. The Canada Trade Balance, ISM Non-Manufacturing PMI from US and the New Zealand GDT Price Index will be release later today.
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