Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie highest since 27 Jan
The AUD/USD climbed to the highest level in over a week on Thursday as global markets gained thanks to a relief rally driven by delays to tariffs on Canada and Mexico.
The Aussie and other risk-sensitive currencies were helped as US shares gained even after a disappointing earnings result from Alphabet, owner of Google, weighed on tech shares.
The US’s Dow Jones index gained 0.7% while the tech-focused Nasdaq lagged with a 0.2% gain.
The AUD/USD gained 0.5%.
In other markets, the NZD/USD gained 0.7% – also to one-week highs – while the USD/SGD fell 0.2% to one-week lows.
GBP gains even as BOE mulls rate cut
Today will see the announcement of the Bank of England’s rate decision. In reaction to generally poor economic indicators, we anticipate that the Bank of England will lower rates by 25 basis points.
We see an 8-1 vote in favor of a cut and the same recommendations (gradual relaxation, restricted policy for a suitable amount of time). The BoE also looks likely to revise its outlook on GDP and inflation projections.
The GBP/USD has rebounded in recent days, and the next key resistance level rests at 50-day EMA 1.2501 followed by 200-day EMA of 1.2700.
However, the GBP has weakened versus the Australian, NZ and Singapore dollars, as more trade-focused FX markets outperformed.
Malaysian ringgit climbs from six-month lows
The Malaysian ringgit was lower in line with most emerging FX markets over the last few months but the MYR has recently rebounded from six-month lows versus the USD and has also gained versus the Singapore dollar.
Ahead of key industrial production data, we predict that increased manufactured exports, especially electronics, and increased production of petroleum products will propel Malaysia’s industrial production (IP) growth to 4.9% year over year in December from 3.6% in November.
This means that after increasing by 1.0% in November, IP decreased by 0.2% month over month.
Technically speaking, USD/MYR has failed to breach the key resistance of 50-day EMA 4.4465 with risks growing for a further move lower
The next level of support of USD/MYR will be 4.3558, where USD buyers may look to take advantage.
Aussie at highs as trade FX outperforms
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 3 – 9 February
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
