It’s been a few days since China have released any negative information, and the Aussie has reacted by having a good strong day on the markets. The AUD/USD touched 0.70c reaching an intraday high of 0.7017 before retreating just a few points below. On top of the “no comment” from China, the US Unemployment Claims climbed slightly to 293K from 283K last week. The US relies on this figure to be below 300K to show that their labour market is strong, so signs of a slowing are starting to appear.
While days like these are expected to be rare in 2016, with continuing slowdown fears in China and the US continuing on it’s path to raising interest rates, this could be a short term spike and normal service resuming when China speaks again.
The AUD/GBP has seen some great support after the BoE basically confirmed that there will be no interest rate rise in 2016. A sell off of the GBP is expected and coupled with a stronger AUD yesterday has seen the AUD/GBP exchange rate break through 0.49p overnight reaching a high of 0.4934, these were the figures we were seeing at the start of the year until China rocked the markets.
The UK has also confirmed that they are to start negotiations in regards to leaving the Eurozone in the coming days which is also expected to put stress on the Pound. Further pressure could arrive tonight if Retail Sales figures don’t hit the expected mark of 3.5% YoY.
Finally to the Eurozone, Mario Draghi spoke last night and again indicated that an increase to their stimulus package is on the table which saw the EUR drop almost 1% against the AUD, and pushed the AUD/EUR exchange rate above 0.64c again.
In commodity circles, the big news of the day was that Oil increased from its 12 year lows and closed above $29 a barrel. There is still a concern of oversupply in the market so we will see if this is again a short term movement or something with more substance in the coming weeks.