In forex today, markets were thin and moves constrained as Chinese markets continue their week-long holiday in one of China’s ‘golden weeks’ in observance of China’s National Day.
RBA was the big mover for the early Tuesday window
With Chinese equity channels untapped this week, Asian session markets are seeing a tight draw on action, and the majority of major G10 FX pairs treaded water until the Reserve Bank of Australia (RBA) dropped another on-hold rate call on markets, as broadly expected. Though the RBA continues to remain hopeful for rising inflation to come, the central bank’s timeline is much longer than most traders have patience for, and the RBA is set to remain on hold on interest rates until the bottom end of 2018.
EUR/USD may retain heavy tone in Europe
The Euro could see continued selling heading into the European market session as Italian political turmoil keeps investor confidence under chains, and Italian bond markets are beginning to flash warning signs as differentials continue to widen, and with a laid-back economic calendar on offer for Tuesday, market sentiment will see all focus drawn to headlines in Europe.
GBP/USD holding flat for the week as traders await further Brexit developments
Brexit continues to unravel into a mess in the UK, sapping market faith in the Sterling and keeping the Cable pinned to recent lows. UK Prime Minister Theresa May has oddly found herself an agent of a hard-Brexit scenario, using the last-ditch threat of ‘no deal is better than a bad deal’ to try and bluff both EU negotiators and her Eurosceptic counterparts back home, but so far little headway has been made, and PM May’s latest ploy of extending Britian’s stay in the EU and giving up key trade negotiation power post-Brexit sees Brexiteers reeling in the UK parliament. Sentiment can be expected to remain sour as headlines continue to cross trading desks throughout the day.
Key notes from the Asia session
RBA: Wage growth likely to remain low for a while
Italy faces the risk of a series of credit rating downgrades – Goldman Sachs
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