Australian Dollar trades generally lower today, after China announced to “indefinitely” suspended all activities under the China-Australia Strategic Economic Dialogue. But the spike on Aussie was relatively shallow and short-lived. Traders are quick to remember that the tariffs by China on some Aussie products didn’t had much material impacts on the latter’s export performance. Additionally, European Commission announced earlier this week to pause all efforts to promote the China comprehensive agreement on investment. Such developments also had little impact on Euro’s exchange rate. Meanwhile, Sterling is mixed, awaiting BoE rate decision, and any hints on tapering of asset purchases.
Technically, Aussie is still bounded in near term consolidations against Dollar, Euro and Yen. Another rise through 0.7815 resistance is in favor in AUD/USD with 0.7676 minor support intact. But we’re not anticipating a break of 0.8006 high for the near term. EUR/AUD is also staying in range of 1.5250/5689, and the sideway consolidation could extend for a while. As for AUD/JPY, further rise to retest 85.43 is mildly in favor with 83.91 minor support intact. Though, current momentum doesn’t warrant a break out from there yet.
In Asia, at the time of writing, Nikkei is trading up 1.72%. Hong Kong HSI is up 0.17%. China Shanghais SSE is down -0.22%. Singapore Strait Times is up 0.26%. Japan 10-year JGB yield is down -0.0048 at 0.090. Overnight, DOW rose 0.29%. S&P 500 rose 0.07%. NASDAQ dropped -0.37%. 10-year yield dropped -0.008 to 1.584.
Fed Rosengren: Premature to focus on tapering
Boston Fed President Eric Rosengren said on Wednesday that “significant slack remains in the economy”. “Substantial improvement” is needed to Fed to begin tapering. “It is quite possible that we’ll see those conditions as we get to the latter half of the year,” he said.
“But right now what we have is one really strong employment report, one quarterly strong GDP report,” Rosengren added. “And so I think it’s premature right now to focus on the tapering.” He emphasized, “the Fed has no desire to surprise markets.”
Separately, Vice Chair Richard Clarida told CNBC, “we’re still a long way from our goals, and in our new framework, we want to see actual progress and not just forecast progress.” Asked about when the Fed should start talking about tapering, he said, “we don’t think so right now.”
Fed Mester: My positive baseline outlook depends on very accommodative policy
Cleveland Fed President Loretta Mester said she expected unemployment rate to fall to 4.5% or lower this year, with GDP growth in 6-7% range. She emphasized, “my positive baseline outlook depends on appropriate monetary policy, which, in my view, will need to be very accommodative for some time to support the broadening of the recovery.”
“I wouldn’t…
Read More: Aussie Mildly Lower on Tensions with China, Sterling Steady ahead of BoE