Fundamental News: August 20, 2013

Reserve Bank of Australia’s August 6 Policy Meeting Minutes released earlier today showed policy board members “agreed that the Bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further.” The minutes noted that inflation was on target, there was lower business investment, and better housing market outlook.

 

Soon after, Reserve Bank of New Zealand’s Governor Graeme Wheeler delivered a speech in Wellington, entitled “Explaining the Role of Macro-Prudential Policy.” In this speech, he announced home lending restrictions will be enforced starting October 1 by banks, with the purpose of slowing housing growth and expectation of supporting monetary policy. He sees NZD as currently overvalued, and expressed that any near-term hike in rates could boost NZD.

 

New Zealand two-year Inflation Expectations rose to 2.36 percent during the September 2013 quarter. The one-year Inflation Expectations rose to 1.90 percent.

 

In Germany, Producer Price Index surprised to the downside in July. The index eased 0.1 percent after turning flat last June, giving it 7 contractions in the last nine months. Compared to the same period last year, Destatis said that the index edged up 0.5 percent.

 

Only Statistics Canada’s Wholesale Sales data is worthy of keeping an eye on later.

 

Commodities News

 

Gold did not succeed in printing its fourth bullish day yesterday, as buyers prematurely manifested fatigue in the lower $1,380s. This snowballed lower until today, with a decent bounce from $1,352 so far. Buyers should remain supportive of $1,340-50 while keeping pressure on yesterday’s high.

 

 

Oil has been trading in a range for many weeks now, but this range has severely tightened since last week. This could indicate a near-term resolution in terms of price direction. $105 and $109 would be the near-term markers for both sides this relatively very quiet week.

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