RBA Keeps Policy on Hold, Aussie Rallies

AUD

The Reserve Bank of Australia kept interest rates unchanged at 0.75% in its first monetary policy meeting this year. The committee reiterated that interest rates are likely to remain low for an extended period and confirmed the readiness to take additional easing measures if needed to support economic growth. Moreover, the statement revealed that the bank believes the coronavirus outbreak and bushfires would weigh on growth. The Australian dollar cheered the decision of remaining on hold and rallied against rivals where the AUDUSD rose to $0.6725, and the EURAUD tumbled to 1.6441.

Equities

Major US stock indices extended post-PBOC measures rally. The People Bank of China expressed its readiness to offset the consequences of the novel coronavirus on the economy and financial markets. On the other hand, the better-than-expected ISM Manufacturing PMI boosted the rally. The Dow Jones Industrial Average futures advanced to 28593, the S&P500 futures rose to 3265, and Nasdaq climbed to 9192. Meanwhile, the Shanghai composite recovered to 2786 despite opening at a one-year low of 2685.

USD

The dollar index, which measures the greenback against a basket of major currencies, recovered from Friday's losses and settled at 97.81 following upbeat economic data. The January ISM Manufacturing PMI jumped to the expansion territory for the first time since August, scoring 50.9 beating estimates of 48.5. The US 10-year yields rebounded to 1.565%, the EURUSD dropped to $1.1034, and the USDJPY ascended to 108.86. Market participants are looking forward to the December factory orders to grasp insight into the economic activity during the last month of the fourth quarter of 2019.

Metals

Gold prices hovered in a tight range awaiting fresh drivers. The price of a gold ounce held steady above $1570, the price of a silver ounce rallied to $17.76, while palladium cleared the resistance zone near $2260 and advanced to $2298.

Oil

Oil prices declined to a thirteen-month low as coronavirus outbreak fuels investors' concerns over the economic growth and oil demand levels. The West Texas Intermediate crude futures dropped to $49.82, and Brent futures fell to $53.97. The spread between Brent and WTI tumbled to a five-month low of $4.13. Market participants are looking forward to the American Petroleum Institute report on the weekly crude oil stock.

Major Economic Events

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