During the Asian session, Australian Q3 GDP came out at an impressive 1.0% QoQ, 2.5% YoY – well above the consensus expectations of 0.8% QoQ, 1.9% YoY. Markets were not expecting such robust growth numbers, especially in light of the RBA rate meeting just a day earlier where the economic outlook was deemed gloomy enough to warrant a rate cut. We believe that the actions of the RBA will stoke expectations of rate cuts from the ECB tomorrow – after all, growth in Europe is nowhere close to the levels in Australia, with yesterday’s Q3 GDP reading for the Eurozone hitting 0.2% QoQ, 1.4% YoY.
Despite the prospect of cuts at tomorrow’s ECB meeting, EURUSD has managed to recover some of its recent losses overnight, as anticipation builds for the start of the EU summit on Thursday and the possibility of a dramatic proposal from France and Germany on how to solve the Eurozone’s stability crisis. EURUSD climbed to a high of 1.3454 at the start of the European session, but we expect the pair to encounter greater headwinds on the approach towards 1.3500.
The sanguine start to today’s trading has also been reflected in the equity markets, where most Asian indices have managed to make gains on the day. The Nikkei is up +1.7%, while the Hang Seng is currently trading +1.4% and Shanghai Composite +0.3%.
On the data calendar today, there is a glut of industrial and manufacturing production figures due for release, including those for Norway, the UK and Germany. Later into the evening we are also looking forward to the latest RBNZ rate decision; markets are expecting no change to rates at 2.50% this time around, but there remains significant scope for the bank to strike a more dovish tone given the ongoing uncertainty in Europe.
Despite the prospect of cuts at tomorrow’s ECB meeting, EURUSD has managed to recover some of its recent losses overnight, as anticipation builds for the start of the EU summit on Thursday and the possibility of a dramatic proposal from France and Germany on how to solve the Eurozone’s stability crisis. EURUSD climbed to a high of 1.3454 at the start of the European session, but we expect the pair to encounter greater headwinds on the approach towards 1.3500.
The sanguine start to today’s trading has also been reflected in the equity markets, where most Asian indices have managed to make gains on the day. The Nikkei is up +1.7%, while the Hang Seng is currently trading +1.4% and Shanghai Composite +0.3%.
On the data calendar today, there is a glut of industrial and manufacturing production figures due for release, including those for Norway, the UK and Germany. Later into the evening we are also looking forward to the latest RBNZ rate decision; markets are expecting no change to rates at 2.50% this time around, but there remains significant scope for the bank to strike a more dovish tone given the ongoing uncertainty in Europe.
By
M.Zohaib Gadit
Forex Trading Consultant
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