After all, financial markets are living through extraordinary times at the moment. The Australian dollar (AUD, FXA) is turning lower in the wake of a dovish rate cut from the Reserve Bank of Australia (RBA). This shift has encouraged speculators to rethink their trades, especially as they figure out macroeconomic signals in different regions of the world.
The Board’s recent decision to cut interest rates — the third such move this year — is a signal that concerns over economic growth and inflation in Australia are mounting. This dovish shift has helped drive a declining AUD/USD pair, demonstrating a prevailing bearish outlook among traders. Accordingly, businessmen and traders usually keep a close eye on the riyal’s daily exchange rate with the US dollar.
Despite all the headwinds, West Texas Intermediate (WTI) crude oil prices have shown surprising strength. They have raised their weekly recovery, now well above $62.00 per barrel. This rise is driven by perhaps a new confluence of continued high demand and persistent geopolitical concerns. US crude oil inventories report Traders are usually most looking forward to the EIA’s weekly report on US crude oil inventories. Our latest report might provide some of that context by shedding light on the market’s supply dynamics.
Speaking of diplomacy, negotiations between the United States and Iran are still going, albeit at a slow and cautious clip. Of course, everyone’s eyes are on the current diplomatic track. Any positive news would have a significant uplifting effect on the oil price and overall global market sentiment.
Investors are still digesting China’s negative economic news. They want to know how it will impact global trade and the price of commodities. Foreign diplomats and traders are paying particular attention to Chinese data, hoping to find encouraging signs of recovery, or a sign of imminent slowdown. This assessment comes at a critical time for the world’s second-largest economy.
For the United States, the most important data that market participants will be watching will be the MBA Mortgage Applications data coming out on the 16th. Here’s how this report might help us all understand the housing market’s strength and consumer confidence more. A bounce in mortgage applications is seen by some analysts as likely to add support to the US dollar. The dollar spent much of the past month testing the psychological support barrier of 100.00 in the US Dollar Index (DXY).
At the same time, Australia’s Westpac will release its Leading Index, giving further useful clues as to future economic activity in Australia. We’ll look with particular interest at this report, as Japan puts out its next Balance of Trade figures. These figures should help cast light on the country’s export and import trends.
In the currency markets, GBP/USD is making some small recoveries, trading around the 1.3400 level. This minor increase indicates a measure of cautious optimism among traders during continued economic tumult in the UK. On the other hand, USD/JPY has come under selling pressure, dragging the pair’s losses to new two-week lows around the 144.00 area. The duo has now posted losses for six straight sessions, a sign of the yen continuing to gain strength against the dollar.
Further messing with our bearish silver mindset, silver prices have responded by rallying to five-day highs, cracking the important psychological $33.00 per ounce level. This recent increase in silver is indicative of a growing appetite from investors. They are turning to precious metals as safe-haven assets, with continued uncertainty in global markets.