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Good moods in Asia, is AU a buy at 0.80?

Summary:

  • moods were solid in Asia with major bourses seeing gains
  • no major changes on the fx, some interesting discussion around AUD
  • BTCUSD slides below $4k on JPM Dimon’s comments

It was a relatively upbeat session in Asia with the Korean Kospi 200 (KOSP200 on xStation) seeing gains as high as 0.8% and Nikkei (JAP225 on xStation) adding 0.5% on its own. The Chinese equities were left in the cold though with Shanghai flat and Hang Seng CE (CHNComp on xStation) actually down 0.4%. 

Interestingly there were no major moves on the fx front with EURUSD still below 1.20 and GBPUSD looking strong at 1.33 ahead of the labour market data today and the BoE tomorrow. However, there was an interesting discussion around the AUD. First, the NAB revised its forecasts suggesting as many as 4 interest rate hikes over the next two years seeing the first one in August of 2018. A rate hike cycle could be just what the AUD needs to renew its gains. However, the NAB has been confronted with professor Ian Harper from the RBA itself who said that "why would anyone suggest monetary tightening when the economy operates below the full capacity?". Harper admitted that the labour market looked good and that AUD strength is to a significant extent a function of weaker US dollar. However it might seem that the RBA could stay cautious and the currency will rely on commodity prices in the reminder of 2017. Looking at the AUDUSD chart we can see that the pair slid back below 0.8050 that was broken in a dynamic way before. This level works as a resistance again. 

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AUDUSD remains high but 0.8050 serves as a resistance again. Source: xStation5 

Speaking of Asian session one cannot forget about Bitcoin (BTCUSD) that is down some 5% today after JPM’s president called it a fraud and said he’d fire anyone trading it for being stupid. We will provide an extended coverage on cryptocurrencies later. 

 

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