Commodity currencies take focus as energy and metals benefit from the weaker USD
FX markets have seen price action focus in commodity currencies amid relatively light newsflow, with the day kicking off with AUD/USD initially pressured as a result of the Australian Trade Balance (-3095mln vs. Exp. -2400mln), which printed its widest deficit in 4 months. However, the pair rallied back above the 0.7100 level after the RBA kept the OCR at a record low of 2.00% and maintained a neutral policy bias, reiterating that monetary policy needs to remain accommodative, but refraining from suggesting that AUD is overvalued.
AUD, along with other commodity currencies including RUB and NOK were all then further bolstered by USD weakness, with the greenback spending the majority of the session in the red. This saw strength filter through to energy and metal prices, with both WTI and Brent futures gaining by around USD 1.00 ahead of today’s API crude oil inventories.
Looking ahead, the key focus during Asia-Pacific hours will be the BoJ policy statement, with some outside bets calling for an expansion of the current QQE programme, although the majority of analysts believe if an increase does take place, it will be done at the end of the month. Elsewhere tomorrow, highlights include German and UK industrial production, UK manufacturing production, US DoE crude oil inventories and comments from Fed's Williams.