No Surprise from RBA; China’s Service Sector Slowdown

Australia’s Cash Rate Remains Unchanged

Today, during the Asian morning, the Reserve Bank of Australia announced that they are keeping their cash rate at +1.50%, marking the 31stmonth in a row when the rate is at the same level. This was widely anticipated by analysts. According to the RBA statement released this morning, it says that even though the global economy had grown in the beginning of 2018, but the second half of it experienced a slide, which has dragged into 2019. That said, the outlook for of the Australian economy is still reasonable, but a few threats started to appear.

AUD/CAD — Technical Outlook

AUD/CAD continues to trade below its short-term downside resistance line taken from the high of December 3rd, even though the pair has shown some resilience in the past couple of trading days. The rate is close to testing the above-mentioned downside line, but as long as that line remains intact, we will aim for lower areas again. That said, given the strong reversal to the upside from the 0.9315 level, there might be a chance of seeing a break above that line as well. For now, we will remain somewhat neutral and wait for a confirmation break through one of our key levels.

China’s Service Sector is Seeing a Slowdown

Also, during the Asian morning, China released its Caixin Services PMI figure for the month of February, which came out worse than expected. The number showed up at 51.1, when it was believed that it might be around 53.5. This, of course, worries the markets, as it points out that the global economy is cooling off slowly. Last time when this number was at similar lows, was back in October. The figure then was at 50.8, which also started to hit alarm bells, as the figure for the month before was at 53.1. Just to remind that the Caixin Services PMI is built of a questionnaire that is completed by carefully chosen purchasing executives of 400 private sector companies in China.

USD/CNH — Technical Outlook

After finding good support near the 6.6748 level between the 25thand the 28thof February, USD/CNH moved slightly to the upside, sparking hope in the bull-bloc. But given that the pair is still trading below the tentative short-term downside resistance line drawn from the high of December 23rd, we will aim lower in the near term.

As For the Rest of Today’s Events

From the Eurozone, we have retail sales for January and expectations are for a +1.3% mom rebound after a 1.6% slide in December. This may drive the yoy rate up to +2.0% from +0.8%. We also get the final services and composite PMIs for February from several European nations and the bloc as a whole, but as it is usually the case, the final prints are expected to confirm their preliminary estimates.

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