RBA joined its global counterparts in easing policy

•      RBA joined its global counterparts in easing policy

•      The Reserve Bank of Australia cut its benchmark interest rate by 25 bps to 2.25% in an attempt to stave off deflationary pressures on the back of low oil prices.

•      The Bank remains still concerned about the housing market and in the statement it said that “The Bank is working with other regulators to assess and contain economic risks that may arise from the housing market.”

•      They will most likely increase the macroprudential tools to take the heat out of the housing market. But, with interest rates now at record lows the impact on housing prices will be watched closely.

•      Further cuts in interest rates could follow, thus AUD/USD is likely to remain under selling pressure. We could see further declines at least until 0.7500 in the near future. 

•      Oil prices jump: 

   News that drillers pulled 94 rigs from US fields last week and a refinery strike, seen as the main reasons for the rise. No change in fundamentals, the rise could be seen as bear market correction.

•      Today:

•      UK: Construction PMI for January is expected to decline a bit. Could be GBP-negative.

•      US: Factory orders for December are expected to fall at an accelerating pace.

•      New Zealand: Q4 unemployment rate is anticipated to decline somewhat. The positive labor market data and the fact that NZD/USD is trading near a strong support level could push the rate up before the bears prevail again.

•      Speakers: St. Louis Fed President James Bullard and Fed President Narayana Kocherlakota speak.