Market Overview - Page 29

Since the last US election, small businesses have become more optimistic, with the Small Business Optimism Index rising by eight points. This optimism is due to the expected improvement in the economy and promises of protectionist policies and tax relief.

RBA kept its key interest rate unchanged at 4.35% but AUD continued to decline. The RBA is considering easing monetary policy due to weak economic growth and inflation still being above target. AUDUSD is near the lower end of its trading range.

Chinese stock indices soared on Monday as the government announced a shift to a more accommodative monetary policy, in response to lower-than-expected consumer inflation data. The change in policy is expected to put pressure on the local currency.

This week will is packed with central bank decisions and economic releases, including CPI from the US, as well as rate decisions from the Reserve Bank of Australia, Bank of Canada, Swiss National Bank and ECB.

The most important publication in the coming weeks will be Friday’s US employment report. Ahead of that, we are turning our attention to other labour market indicators. Wednesday’s ADP private sector employment report is the closest we have to a.

The Dollar Index has retreated from a high, but another attack on the highs is possible. The Fed is revising rate cut expectations, consumer demand and service sector inflation are causing caution.

Switzerland is awaiting the release of CPI data, which could lead to further monetary easing. Employment data from the US and Canada will also be closely watched.

The price of gold fell 4% but then rebounded, finding support at $2,600 per troy ounce. Further drops could lead to sellers targeting $2,540, with a long-term target of $2,000 per ounce. Small steps are now more reasonable.

XRP is experiencing an increase in value while Ethereum is facing selling pressure. The overall market is growing, but bitcoin's rise is limited.

The RBNZ cutting its key rate by 50 b. p. suggests a faster pace of normalisation. NZDUSD rebounded, but it may only be temporary, as the Fed's monetary policy tone diverges in favour of the USD.

The period of currency turbulence may continue, but there is potential for the Canadian dollar to strengthen in the long term if oil prices increase.

Oil prices rose by over 7% in the past week, reaching above $70 per barrel. Factors driving the increase include the Russia-Ukraine conflict, speculation about the US returning its focus to oil and gas, and rumours of OPEC+ postponing production cuts.