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Aussie Knocked Down By RBA Stevens

Published 06/10/2015, 02:47 AM
Updated 03/09/2019, 08:30 AM

Australian dollar dipped notably in Asian session as weighed down by comments from RBA governor Glenn Stevens. He noted that the central bank remained "open to the possibility of further policy easing" if it's beneficial for sustainable growth. The growth in economy was seen as "disappointing" over the past two years. Slowdown in China could be quicker than expected. Also, fall in mining investment could accelerate while outside that, investment could also weaken in the year ahead. Released in Australia, Westpac consumer confidence dropped -6.9% in June. At this point, AUD/USD is trading above 0.7597 temporary low and more consolidation could be seen. But with 0.7839 resistance intact, we'd expect further decline ahead for 0.7532 low and below. Meanwhile, EUR/AUD extends recent rebound and edges higher to 1.4767. Further rally is expected in the cross for 1.4893 resistance next.

In US, stocks closed nearly flat overnight with DJIA down -0.01% and S&P 500 up 0.04%. As we pointed out yesterday, the development in DJIA is rather bearish. The near term focus is on 17733.12 support. Failure to rebound from this level and a sustained break will raise the chance of "long term" reversal. 30 year yield rose for another day to 3.151% while 10 year yield also rose to 2.417%. Market's focus will stay on the timing of Fed's rate hike. According to a Bloomberg survey, economists are expecting 50% chance of a September hike, 9% for October, 20% for December and 10% for 2016. Meanwhile, market implied chance was over 90% for September hike. While this week's economic data like retail sales would be watched, main attention will be on Fed chair Janet Yellen's press conference after the June 16-17 FOMC meeting.

Elsewhere, Japan machine orders rose 3.8% mom in April while domestic CGPI dropped -2.1% yoy in May. UK production data will be the main focus today.

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