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Aussie Pressured on Rate Cut Talk21 February 2019 by Dave Evans

Morning Report: 07.00 London

The Australian dollar is under scrutiny this morning, with the AUD/JPY falling 1.11% and the AUD/USD by just under 1.00%. The Aussie has now given back all the week’s gains against the dollar and yen. The Aussie is being hit by a Westpac report which predicts two rate cuts this year. In addition, there are reports that Chinese ports are blocking coal imports beyond a cap of 12m tonnes.

The dollar index is generally on the front foot after a mixed release of FOMC meeting minutes which hinted a dovish shift with potential rate cuts this year. The dollar is on the rise this morning after moderate selling yesterday.

The EUR/USD is on the back foot, slipping below the 1.1350 level, while the GBP/USD is posting back to back losses. Tuesday’s rally is still holding firm however. The EUR/GBP continues to hold below the 0.8700 level as the euro keeps up its underperformance.

The USD/CAD is making gains, following four days of losses. Meanwhile, the USD/CHF held the 1.000 level yesterday, with follow up buying this morning.

The USD/JPY is unchanged as the yen and dollar cancel each other out. Other yen pairs are slightly negative, with the EUR/JPY and GBP/JPY making losses.

Coming up today

Today, we have a slew of European services and manufacturing PMI data points, starting with French data at 08.15. German data is at 08.30 and European data at 09.00.

At 09.30, we get the latest public sector net borrowing data.

The ECB monetary policy meeting accounts are at 12.30.

US core durable good orders are at 13.30, released alongside the Philly Fed manufacturing Index.

BOC governor Poloz speaks at 17.35.

RBA governor Lowe speaks at 22.30.

Trade Idea

The Australian dollar has been climbing up stairs, but down escalators of late. The risks are mounting for the Aussie and there could be further downside from here.

Aussie Pressured on Rate Cut Talk

A good way to play this is a LOWER trade predicting that the AUD/USD will close below 0.7050 in 14 days for a potential return of 171%.

Aussie Pressured on Rate Cut Talk