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Currency Market Analysis

Jan 25, 2019 | Currency Market Analysis

Global Themes

Euro nears two-year lows as ECB turns cautious

The euro fell sharply overnight after the European Central Bank signalled increasing caution at its overnight rate-setting meeting.

The ECB said it acknowledged the “weaker momentum” and economic risks had “clearly moved to the downside”.

The EURSGD fell 0.5% as it hit the lowest levels since May 2017.

Aussie rate cut view

Across markets, shares were mostly lower as investors reacted to commentary that the US and Chinese were still some distance from making a trade deal.

The safe haven like the US dollar and Japanese yen were both higher.

The Australian dollar was sharply lower yesterday after a major bank raised their variable lending rate signalled growing chance of a rate cut from the Reserve Bank of Australia.

With the hike from the NAB seen as a de factor tightening, the chance of a rate cut from the RBA this year has risen from 50% to 60%.

Politics in the driver’s seat

The economic data slows over the weekend so instead global politics will be in focus.

Chiefly, the US government shutdown and US-China trade talks are likely to drive global sentiment.

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