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ForexLive Asia FX news wrap: AUD lower as RBA outlines 4 further easing options – ForexLive


Forex news for Asia trading
Tuesday 22
September 2020 

Reserve Bank of Australia
Deputy Governor Guy Debelle spoke today on his economic and policy
outlook. In his speech he indicated four further options the RBA is
considering:

  1. to
    buy bonds further out along the curve to lower rates at longer
    maturities
  2. FX
    intervention (conceding while he did so its not clear it would be
    effective)
  3. to
    lower the cash rate further, without going into negative territory
  4. negative
    rates

(see
bullets above for further detail):

As
he spoke the AUD was taken lower (not a big drop) and as I post a few
hours later it is tracking sideways circa 0.7213 or so.

USD/JPY
has dribbled lower on the session, again not by much, but putting
these two together has seen a decent raneg move lower for AUD/JPY. A
clear catalyst to prompt the lower USD/JPY was not clear and given
USD/CHF is barely changed it does seem a yen specific move. There has
been much speculation of the yen becoming more attractive as real
yields in the country edge positive (inflation is weak and on many
measures negative). Its not overly clear that offshore investors
benefit from ‘real’ rates given they are not buying goods and
services in Japan but for onshore investors its an understandable
argument and so far its caught on as a narrative to explain yen
strength. It was a Japanese market holiday again today (Monday was
also) and no fresh news nor data out of the country of note for
forex.

EUR/USD,
USD/CAD, NZD/USD cable … all are barely changed. Federal Reserve
System Powell is giving testimony to the US Congress on Tuesday (US
time, and Wednesday and Thursday also) which seems to have given
Asian FX an excuse to hold back on trading. Note, though, in the
bullets above are some of the main points Powell will be making in
his prepared remarks tomorrow (i.e. Tuesday US time). Admittedly its the Q&A that is
likely to be more interesting. Curiously, Atlanta Fed President Bullard gave an interview in which he said the current level of fiscal action from the Congress is enough, which contradicts Powell and other Fed officials. 

For
those following along the US politics surrounding nominating a new
Supreme Court judge key Trump ally Senator Lindsey Graham said the
nominee already has the votes in the Upper Hpouse to gain approval.
His comments come before Trump has even announced his nominee, but,
well, there you go.

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