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AUS Open - Dollar extends losses following dovish Fed comments; WTI extends rally

Market Analysis /
08 Jan 2019

LDN/NY Session Wrap:

* German and Euro Zone retail sales numbers for November beat expectations, arriving at 1.4 % and 0.6 % respectively (vs 0.4 % and 0.2 % expected)

* The US ISM Non-Manufacturing PMI number was disappointing, arriving at 57.6 vs 59.6 expected

* Federal Reserve Member Bostic sees only one interest rate increase for 2019

* The recovery in the US stock market resumed on Monday with the S&P 500 rising 0.8 percent

* In Europe, investors remained more cautious as they are wary of political risks


* The Greenback weakened across the board, following dovish comments from Fed´s Powell on Friday

* The US Dollar only managed to rise slightly against the Japanese Yen - which suffered from the improvement in risk appetite

* The Euro is slowly approaching 1.15; positive economic data from the Euro Zone gave it a slight boost, along with broad USD weakness

* The Pound is consolidating in a tight range, but expect a sharp increase in volatility as we approach the next Brexit vote in the UK Parliament on Jan 14-15


* Oil prices jumped after Saudi Arabia announced it is planning to reduce exports to 7.1 million barrels per day

* WTI almost touched the $50 level, but failed to keep up the momentum and eventually fell back $49

* Nevertheless, positive momentum is growing, and the charts suggest WTI could see a recovery in the near-term

* Gold continues to benefit from the Dollar weakness, but improved risk appetite prevented a continuation of the rally


APAC Session Preview:

* Economic calendar is rather light

* Only notable data release: The Australian trade balance for November, expected at 2.23bln (vs 2.31bln previously)

* Traders remain focused on the trade talks between the US and China, which have started today

* Brexit talks to come into focus as well towards the end of the week

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