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Australian Dollar Softens after RBA Expands QE, Euro Pressing Key Support Again

Australian Dollar softens mildly after RBA expands asset purchases by another AUD 100B. Also, it pledges to keep interest rate unchanged at current level until at least 2024. On the other hand, New Zealand Dollar and Canadian Dollar are the relatively stronger ones. But for now, both are capped below yesterday’s highs. Euro would be a focus as it continues to stay as weakest together with Swiss Franc. Dollar and Yen are mixed for now.

Technically, 1.2052 support is again in focus in EUR/USD. Break will the resume the correction from 1.2348. Correspondingly, EUR/JPY retreats sharply after failing 127.48 resistance. Break of 126.25 minor support will extend the consolidation pattern from 127.48 with another falling leg.

EUR/CAD is also eyes 1.5417 as the stronger than expected rebound from 1.5266 lost momentum. Break will signal return of weakness in EUR/CAD and bring retest of 1.5266 low.

In Asia, currently, Nikkei is up 0.81%. Hong Kong HSI is up 1.40%. China Shanghai SSE is up 0.69%. Singapore Strait Times is up 0.51%. Japan 10-year JGB yield is down -0.004 at 0.057. Overnight, DOW rose 0.76%. S&P 500 rose 1.61%. NASDAQ rose 2.55%. 10-year yield dropped -0.016 to 1.077.

RBA kept cash rate at 0.1%, expands asset purchase by AUD 100B

RBA kept cash rate target and 3-year AGB target unchanged at 0.10%. It announced to buy an additional AUD 100B of government bonds, including states and territories, after the current program completes in mid-April. The additional purchases will be held at current rate of AUD 5B per week. On forward guidance, RBA maintained the pledge that it ” will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range”. It doesn’t expect the conditions to be met “until 2024 at earliest”.

In the central scenario of economic outlook, RBA expects GDP to grow 3.5% in both 2021 and 2022. GDP will reach end-2019 level by the middle of this year. Unemployment rate will be around 6% by the end of 2021, and 5.5% by the end of 2022. CPI is projected to be at 1.25% over 2021 and 1.50% over 2022.

SNB Jordan: Switzerland is anything but a currency manipulator

SNB Chairman Thomas Jordan said yesterday, at the moment, “foreign exchange interventions are very important because we have seen great pressure on the franc, especially in the COVID crisis.” Over CHF 100B was spent on intervention in the first nine months of 2020, to curb the surge in the safe haven currency.

Jordan was bother by US designation of Switzerland as a currency manipulator.