Australian Bonds Waver As Markets Remain muted in Thin Trading

The Australian government bonds were drifting between small gains and losses in quiet Wednesday trading session. Also, trading activity to resume after New Year celebrations, probably from the second week of January, 2017 as global market receives no more important data till then.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2-basis points to 2.86 percent, the yield on 15-year note also dipped 2 basis points to 3.33 percent, while the yield on short-term 2-year bounced 1/2 basis point to 2.00 percent by 04:40 GMT.

On Tuesday, the minutes from the December board meeting demonstrated their range of concerns as well as highlighting the positives within current conditions. The board was rightly concerned about the potential harm to global economic growth if the US were to enact policies that restrict trade. The board lists this issue as one of uncertainty and one that will unfold over 2017. Trade is not a zero-sum game and misguided policy has the potential to harm living standards in the US as well as in its trading partners.

Despite these areas of softness, the board is still of the belief that inflation will return to the RBA’s target band over time. The RBA remains overly optimistic regarding economic activity and inflation. If activity and inflation remain below their forecasts ‘over time’ then there is a strong chance the RBA is not done cutting rates in this cycle.

However, we expect that the easier monetary policy has helped to bolster country’s demand, as the Reserve Bank of Australia reacted to sub-target inflation by cutting the official rate by 50 basis points during the last year to 1.50 percent. Additionally, the RBA’s policy stance in 2017 will completely depend on the developments in consumer inflation and in the event that the Australian dollar appreciates. The RBA’s first monetary policy meeting for 2017 is scheduled to be held on Tuesday, February 7.

Meanwhile, the benchmark Australia’s S&P/ASX 200 index traded 0.71 percent higher at 5,636 by 04:40 GMT. While at 04:00 GMT, the FxWirePro’s Hourly Australian Dollar Strength Index stood neutral at +53.84 (higher than +75 represent a bullish trend).

The material has been provided by InstaForex Company – www.instaforex.com

Fxwirepro: Aud/cad on Track to Test 200-Dma at 0.9833, Good to Buy on Dips

  • AUD/CAD has broken above major trendline resistance at 0.9745.
     
  • Technical indicators have turned bullish in the short term.
     
  • RSI and Stochs have rolled over from oversold territory and MACD has shown a bullish crossover on signal line.
     
  • We see scope for test of 20-DMA at 0.98 and further bullishness could see test of 200-DMA at 0.9833.
     
  • Support levels – 0.9734 (5-DMA), 0.97, 0.9682 (Dec 20 low), 0.96, 0.9578 (June 30 low)
     
  • Resistance levels – 0.98 (20-DMA), 0.9833 (200-DMA), 0.9846 (23.6% Fib 1.0397 to 0.9676 fall)
     

Recommendation: Good to buy on dips around 0.9760/70, SL: 0.9730, TP: 0.98/ 0.9830/ 0.9845
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FxWirePro’s Hourly AUD Spot Index was at 53.8433 (Neutral), while Hourly CAD Spot Index was at -83.367 (Highly Bearish) at 0440 GMT. For more details on FxWirePro’s Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
 

The material has been provided by InstaForex Company – www.instaforex.com