Bank of England Expected to Hold Interest Rates at 3.75% as Inflation Remains Elevated 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Jerome Powell Attends Supreme Court Hearing on Trump Effort to Fire Fed Governor, Calling It Historic 
China Extends Gold Buying Streak as Reserves Surge Despite Volatile Prices 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
2025 Market Outlook: Key January Events to Watch 
Why Trump’s new pick for Fed chair hit gold and silver markets – for good reasons 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
US Gas Market Poised for Supercycle: Bernstein Analysts 
This week’s major events are RBA and BoC’s monetary policies. RBA policy decision is universally expected to be on hold as the Board continues to monitor the impact of the previous three rate cuts on the economy. Q3 balance of payments are expected to show net exports adding 0.1ppts to GDP while the current account posts a back-to-back surplus of $6.1bn. Q3 public demand is expected to rise 0.9% and is the last GDP partial ahead of tomorrow’s final release.
The Aussie has bounced around 2 cents since early October, aided by a more positive tone on US-China trade talks and the unexpected Brexit breakthrough which has bolstered global risk appetite. AUD should remain supported near term but any trade in the 0.6950/0.7000 area is likely to attract substantial sellers. While supply interruptions could limit the recent fall in iron ore prices, coal prices remain near 3-year lows and we expect the US and China to reach only a very limited trade agreement in coming weeks.
Moreover, the RBA does not want to encourage an A$ revival and pricing for another rate cut has been unwound too far, as we still expect a rate cut in February 2020.
Trade tips:
Buy a 3m AUD/JPY put spread (72.0/69.5) (spot ref: 74.800); sell a 3m 1.0975 AUD/NZD call (spot ref: 1.0500).
In yet another trading perspective, at spot reference of AUDUSD: 0.6860 levels, bidding momentary bullish rationale, it is advisable to execute one-touch call options strategy with upper strikes at 0.6890 levels, thereby, one can fetch certain yields as long as the underlying spot FX keeps spiking on the expiration.
Alternatively, on hedging grounds ahead of RBA’s monetary policy that is scheduled for the next week, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 0.66 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position. Courtesy: Westpac
