Daily Market Review — 02/02/2016
Reserve Bank of Australia Rate Statement – Main Event Today
This morning the Reserve Bank of Australia published its Interest Rate Decision. As was expected, the Bank left the rate at the same level, 2%. The Australian currency has reacted with restraint, because the tone of the rate statement was neutral. However, in the statement it was said that there is scope for further easing of monetary policy. Meanwhile, there was an increase in all sectors of the Australian economy except mining during 2015. Also, the Australian regulator expressed concerns over a slowdown in global economic growth, and particularly with regards to the country’s largest trading partner – China. In addition, there are no prospects for inflation in the near future due to the fall in prices on commodity markets (especially iron ore and coal). It should be noted that support for the pair will provide general weakness of the Japanese yen after the Bank of Japan cut rate.
Resistance: 86.35, 87.25, 88.07
Support: 84.78, 84.18, 83.38
During yesterday’s session the Euro strengthened significantly against the US dollar. Such dynamics were due to the weak U.S. economic statistics. The U.S personal income rose 0.3% (forecast + 0,2%). Meanwhile, U.S. personal spending showed zero change against the average forecast of growth of 0.1%. Also, U.S. Real Personal Consumption showed zero change, it means, as usual, low inflation growth in the US economy. Today, the dynamics of trade can be influenced by the publication of data at 08:55 (GMT). In addition, a similar report on the Euro area will be submitted at 10:00 (GMT).
Resistance: 1.0921, 1.0942, 1.0967
Support: 1.0868, 1.0834, 1.0809
During yesterday’s trading day the major stock indexes in Europe fell moderately, aided by the negative statistics on the Chinese economy. The China Manufacturing PMI in January fell more than expected. The decline in industrial activity in China has been observed for six months in a row, despite the regular government’s support. Also, the data on business activity in the manufacturing sector in France, Germany and the Eurozone, which also showed some slowdown, were important for market dynamics. Meanwhile, one of the leaders of the ECB, Benoit Ker noted that upward revision of quantitative easing program in March had provided some support for stock markets. Today, investors should pay attention to data on the Germany Unemployment Rate and the Eurozone Unemployment Rate, which will be presented during the day.
Resistance: 6006.53, 6064.57, 6107.53
Support: 5953.13, 5895.08, 5832.39
Quotes of the precious metal rose again at yesterday’s session, driven by increased demand for gold as a safe asset. Such dynamics were due to the weak Chinese Manufacturing PMI. In addition, yesterday there was a drop in the US currency. Meanwhile, the celebration of Chinese New Year provides some support to the gold market, because the demand for gold is rising. However, according to most analysts, gold will be hard to keep, as those gains the US Federal Reserve plans to continue gradually raising rates, which would negatively affect the dynamics of gold. When the rates are rising investors prefer to get rid of gold. Today, the dynamics of trading will completely depend on the situation on the stock markets and investors’ risk appetite.
Resistance: 1130.27, 1142.53, 1156.58
Support: 1122.60, 1112.64, 1097.90