The Reserve Bank of Australia opted to keep rates on hold, leading to mixed market reactions. This and more today’s daily Forex news and trade opportunities.
6rd December, AtoZForex – Besides the cash rate decision from the RBA, we also have the Canada trade balance due for release later today on the daily Forex news.
#1 RBA leaves rates unchanged
As expected, the Reserve Bank of Australia opted to keep rates unchanged at a record low of 1.5%. The board judged that inflation remains quite low. The continuing subdued growth in labor costs means that inflation is expected to remain low for some time, before returning to more normal levels. Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector.
#2 Matteo Renzi resigns – EUR rebounds after reaching 21-month low
Italian residents have rejected the constitutional changes, which were suggested by the government. Following the result of the vote, Italian PM Matteo Renzi has announced his resignation. Following the results, the euro initially dipped, only to rebound and rally strongly from a 21 month low.
#3 Italian Referendum impact on ECB meeting – uncertainty ahead
The outcome of the referendum was not very surprising as polls were indicating a possibility of a ‘No’ result. But the event still imposed challenges to the eurozone and Italy. Because Italian banks are facing difficulties, due to a burden of nonperforming loans. Hence, the ‘No’ vote will be covered during the ECB’s meeting as well the escalating need to continue the bond-purchasing program. However, some policymakers ask Mario Draghi to signal when and how the QE will be curtailed.
#4 ECB Villeroy makes Italexit Brexit comparison
On Monday, the Governor of the Bank of France François Villeroy de Galhau said that Italian voters’ defeat of a referendum on constitutional reforms cannot be put in comparison to Britain’s Brexit. Mr. Villeroy said that policymakers will still watch closely Italy’s referendum decision consequences. Moreover, he has warned Britain that there won’t be any “cherry picking’’ on market access after the formal Brexit talks.
#5 Oil rally slows
Following the OPEC deal, the oil rally has been on in the past few days. Yesterday, prices calmed and seem like they are ready to rally again.
Opportunity: Buy oil on dips
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