Aussie Plunges on Dovish RBA Minutes

AUD  

The Australian dollar dropped against rivals on somehow dovish RBA minutes. The Reserve Bank of Australia published the minutes of the last monetary policy meeting, revealing that the board discussed further easing but chose to hold taking into consideration that interest rates are already very low. The board expressed readiness to act further if needed and stated that it is reasonable to expect rates to remain low for an extended period of time. Also, the bank considers the novel Coronavirus a new source of uncertainty and would affect the Chinese economy and ripple to the Australian economy. The cautious soft tone drove the Australian dollar lower where the AUDUSD plunged to $0.6682, and EURAUD edged higher towards the 200-hour exponential moving average at 1.6213.

USD

The dollar index, which measures the greenback against a basket of major currencies, rallied to another four-month high of 99.24 as European currencies drifted lower. The euro and pound account for almost 70% of the dollar index basket. The single currency plunged 3.7% against the dollar since early January on growth concerns. Meanwhile, the British pound traded sideways down on soft economic data and woes circulating the negotiations between the United Kingdom and the European Union in the transition period. Market participants are looking forward to the UK December jobs report and German ZEW economic sentiment. The EURUSD declined to $1.0833, and GBPUSD fell to $1.2970.

Metals

Gold prices inched higher as the novel Coronavirus continued to weigh on risk sentiment. Moody's revised lower the 2020 growth figures in China and now sees the economy growing by only 5.2% versus 5.8% prior. The price of a gold ounce rose to $1589, the price of a silver ounce climbed to $17.91, and palladium futures soared to a record high of $2446.

Oil

Oil prices decline as market participants fear the impact of coronavirus on the global economy. OPEC and the IEA lowered the oil demand forecast and oil demand growth forecasts for 2020 as the virus outbreak weighed on the economic activity around the world. Also, there are expectations that China will not be able to recover from the shock of nCOV in the second quarter of 2020. The West Texas Intermediate crude futures declined to $51.25, and Brent futures tumbled to $56.65.

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