“Will the RBA now be forced to jaw bone the AUD lower?”
The US Dollar continued to struggle on Friday following weaker than expected fourth quarter GDP figures that came in at 2.4% annualised vs the 3.0% economists expected. The weakening US Dollar was welcome news to some US Fed officials who commented mid-week that a weaker US Dollar would be good for the economy. Those comments helped move the Aussie Dollar to a four year high of 0.8135 and if the upward trend continues any suggestion recently from economists of an interest rate hike in Australia mid-2018 may reverse completely as a higher Aussie Dollar is not wanted at the RBA. If the Aussie Dollar v US Dollar rose to 0.85c or higher it may force the RBA to consider dropping the official cash rate to try and get the local currency back towards 0.70c. Wednesday will be an important day for the Aussie Dollar with quarterly inflation data due as well as the latest China PMI figures. If the data numbers show inflation is picking up down under the AUD may jump higher however experience tells me that investment banks and hedge funds may be thinking a little further ahead and sell the AUD on the good news anticipating the RBA may be forced to lower the cash rate or try and jaw bone the local currency lower.
The Yen benefited late last week following comments from BOJ Governor Kuroda who said he expected the Japanese economy to continue to grow at a moderate pace and he expects inflation to pick up in time.
Donald Trump’s address to the World Economic Forum in Switzerland was generally on par with what traders expected. The general theme was “America First” however Trump has changed his tune slightly on the trade agreement deals that he’s either walked away from in his first year in office or threatened to walk away from. Trump said that if the US can strike significantly better deals he is happy to return to the negotiation table. The Canadian Dollar initially jumped on Trump’s remarks however the CAD v JPY has slipped back late in Friday’s trading day to close at 88.17 after touching a session low of 87.88. TIA will continue to hold its current short position with the profit target just inside the 61.8% FIB expansion level and Daily 200 EMA. Please review today’s video update for further details. There are no other TIA trade setups to consider this Monday.
This week’s economic calendar shows the back half of the week will likely be busier than the first half with the US Federal Reserve’s first statement for 2018 set for release at 6am AEDT Thursday and US Non-Farm Payrolls set for release on Friday. Currency markets are giving us plenty of volatility this year which is just what we need to create trade set ups.
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 keynote 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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