A surprise drop in metals prices yesterday sees the AUD down around 1-2% across the board with AUD/GBP the worst performer down around two percent. AUD/EUR and AUD/USD didn't fair too much better following the sudden decline in iron prices to the tune of about 5%. Over the week iron ore is down about 10%, but I wouldn't be too worried as iron ore is perhaps the most exceptionally volatile base metal on the market and is prone to big moves in both directions.
The Bank of Japan held rates steady again yesterday at -0.1% continuing on their negative yield trajectory in the hope of boosting sluggish growth and inflation on the island nation. Much has been talked about Japan's negative rates, but the BOJ may just get the last laugh should we see a sustained pick up in the Japanese economy and spending on the part of the Japanese people (who are notorious savers)... and it's no coincidence that the Japanese Nikkei and Topix are the best performing stock index's in Asia this year up 21% and 23% respectively.... there's only so much negative yield an intelligent investor can handle.
Ahead today is a raft of European economic data along with New Zealand parliamentary elections this weekend. Those importers watching rates and potentially holding out for higher levels vs. the Euro may wish to book ahead of these announcements tonight.
AUD EXCHANGE RATES:
AUD/USD – 0.7930
AUD/GBP – 0.5839
AUD/EUR – 0.6641
AUD/NZD – 1.0845
AUD/JPY – 89.163
DATA RELEASES TODAY:
EUR - Manufacturing and Services PMI France & Germany from 5.00pm
***Above rates are indicative wholesale rates and intended as a guide only***
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Senior Corporate FX Dealer
Phone Patrick - 0431 278 632