Strong dollar sends commodity currencies lower | CMC Markets Daily Commentary
AUD, CAD and NZD fell sharply on Thursday as the US dollar index extended a three-day rally to 96.2 area while crude oil prices stayed unchanged at around $62.5 area. Drivers behind the greenback, including strong job data, lift confidence on the US economic performance, as well as rising concerns on China’s economic growth, which could dampen the commodity demand and EM currency outlook.
AUD/USD registered its biggest intraday fall seen in nearly two years following a dovish-biased statement from the Reserve Bank of Australia, with RBA’s spokesman saying that the probability of moving up the interest rate is equal to that of moving down. Increasing unemployment rate and lack of inflationary pressure were the main reasons for the central bank to take a flexible approach in monetary policy. Technically, AUD/USD has entered a short-term pullback with its MACD forming a ‘dead cross’. Immediate support and resistance level can be found at around 0.702 and 0.730 respectively.
Asian markets opened mixed on Thursday following two-day slide in the US market, as earnings flagged risk of faster-than-expected slowdown in China amid trade conflicts with the US. Before the two country’s leaders reach a deal to improve the bilateral trade relationships and stop the tariff war in a meeting scheduled end of this month, trade uncertainties will continue to contain risk appetite for China-related sectors, such as technology, semiconductor and even commodities.
In Singapore, the Straits Times Index opened 20 points higher but quickly gave up some gains in banks and Thai Beverage following its ex-dividend. Technically, the STI continues to consolidate around 3,200 points waiting for fresh catalyst from big bank earnings towards end of this month. Its immediate support and resistance levels are at 3,077 and 3,225 respectively.
China, HK, Taiwan and Vietnam are closed for the Lunar New Year holiday.
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