A lack of positive economic data and a Russian subway bomb kept financial markets in a risk-off mood on Monday. European and US stock indexes closed down with the Yen being a major gainer on currency markets. The Aussie Dollar gathered pace through the European and US trading sessions after being sold off mid-morning Monday after a slew of local economic data failed to give traders reason to support the local currency early this week.
Please take note of the fact that the Asian trading session really does mean very little when it comes to the overall currency market direction and what happens in the Asian trading session is often completely reversed when Europe opens. Yesterday was another good example of this with the AUD v USD falling through the Asian session only to be supported through the European and US sessions. Many local retail traders would have been getting short on the Aussie Dollar as it fell between 11.30am and 5.00pm only to see it move back higher the moment European markets opened. I will continue to warn you that having strong conviction on a currency direction based on a movement through the Asian trading session is dangerous and you will often see price reverse when Europe opens.
Today sees the RBA statement at 2.30pm and whilst the RBA won’t adjust interest rates today the statement will be the key. Yesterday traders sold the AUD quickly the moment the latest building approvals data was released which showed another month of building approval declines. The RBA has repeatedly warned that Australia particularly Sydney and Melbourne is in the grip of an overpriced and oversupplied apartment market and one of its biggest fears is a collapse in this industry which would put upward pressure on the unemployment rate. Traders will be eager to read what’s in the statement today as to whether or not the RBA’s concerns are growing in this area. Expect increased volatility on the AUD at 2.30pm AEST.
About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular key-note speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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