Aussie Strengthens as RBA Holds Key Rate at 2.5%, USDJPY Continues Upside - 3.9.2013

The RBA earlier today at its meeting decided as it was expected to maintain key rate at 2.50%. In its statement, the RBA reiterated that expects the mining investment to drop with the economy in a transition phase, growth is a bit below trend, unemployment rose slightly and inflation is under control. Moreover, RBA said that even though the Australian dollar depreciated still remains at high levels and its value could reduce further, helping growth. The AUDUSD rose above psychological level at 0.90 and was lastly seen at 0.9044. We consider that the currency pair is in 0.9232/0.8847 range trading pattern with longer term prevailing downtrend likely to drive prices lower eventually.

The USDJPY yesterday breached key cap at 99.14 and continued higher today underpinned by BOJ data that the monetary base growth pace increased to 42% from 38%. That improved risk sentiment driving NIKKEI 225 higher by 2.81% which dragged the currency pair to fresh 1-month peak at 99.69, which is a bit away from the psychological 100 level. We expect the USDJPY to be weighed by resistance at 100 and likely the risk on Syria to resume increasing pressure on the pair, in addition we are eagerly anticipating the BOJ monetary statement on Thursday although no change is projected.

Elsewhere, the US dollar against the swissy surged as high as 0.9371 straight from support at 0.9168. The USDCHF found support near the bottom of the 0.9750/0.9145 longer term wide range and turned to upside bias. Surprisingly stronger GDP data for Switzerland did not helped much its currency that kept losing against the greenback.

Looking ahead, the most important event to watch today is the US ISM Manufacturing PMI indicator. Tomorrow we will be focusing on Aussie GDP figure, European Services PMI, EZ Retail Sales and later on the Bank of Canada Rate Statement.