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    Morning Report – Tuesday 13th August




    Morgan Stanley analysts say Fed to cut U.S. rates in September

    (Reuters 13/08/2019) - Morgan Stanley (MS.N) analysts said on Monday that they now expect the U.S. Federal Reserve to cut rates in September and then again in October.

    “Trade’s ‘simmer’ has begun to boil, business sentiment and capex (capital expenditures) have softened further, global growth remains weak and inflation expectations have fallen,” while the gap between 3-month US3MT=RR and 10-year U.S. government bonds US10YT=RR points to overly restrictive monetary policy, the investment bank’s analysts said in a note.

    The analysts previously predicted a cut in October alone, saying the central bank would “wait for further evidence that downside risks are weighing on the economy.

    ”The bank joins a number of investors betting that the Fed’s first rate cut since 2008, late last month, will be the first of several moves to lower borrowing costs. Goldman Sachs (GS.N) said earlier this month it sees a strong chance of rate cuts in both September and October.
    Morgan Stanley is one of 24 so-called primary dealers that can trade directly with the Fed’s main market desk in New York.

    Gold Price Prepares for Next Leg Higher, Silver Price Remains Supported

    (DailyFX 12/08/2019) - On the charts, the 61.8% Fibonacci level at $1,492/oz. has just been broken but remain in-plays while the recent high/low either side of $1,472/oz should provide support if the price continues to fade lower. Overall the chart remains positive, trading above all three moving averages, while gold has moved back out of the overbought zone.


    Silver’s recent breakout has stalled, and the recent slip back has pushed the price back towards an important support zone between an old double-high at $16.65/oz. and the 61.8% Fibonacci retracement level at $16.56/oz. Just below here is the 20-day moving average which again should provide a level of support. As with gold, the chart remains biased to further upside with the recent drift lower taking silver out of extreme overbought territory.

    RBA Kent: We are inflation targeters, unlikely to need negative rates in Australia
    (FXStreet 13/08/2019) - In an address to Finance & Treasury Association, Christopher Kent, Assistant Governor (Financial Markets), and in a speech titled, The Usual Transmission – Monetary Policy and Financial Conditions, he said that the RBA are inflation targeters and are not targetting unemployment while suggesting that negative rates is unlikely.

    Additional comments: Recent broad-based easing in financial conditions will support demand. More spare capacity than anticipated. Lower rates have worked to pull down AUD, despite firm commodity prices. Bank funding costs have declined to record lows. Banks passed on most of rate cuts to depositors and borrowers. Variable mortgage rates have fallen by 44 bps on average, consistent with past. Approvals for new home loans rose broadly in June amid improving housing market. We are inflation targeters. Unlikely to need negative rates in Australia. Not all policies overseas are appropriate for Australia. Need for unconventional policies unlikely, but possible. Negative rates at more extreme end of unconventional policy. Lower AUD provides stimulus to economy.

    FX implications:
    Interesting that he has emphasised a focus on inflation because not too long ago, the unemployment rate was the trade. The fact that he has said that it is unlikely to need negative rates in Australia, but is possible, tilts the balance in the Aussie's bulls favour. AUD/USD is higher on the headlines, but not by much - +0.05%


    Below are Trading Central's Intraday preference recommendations. Short (SELL) positions and long (BUY) positions have two targets issued which may be used as take profit levels. Above or below a certain figure indicates the pivot level which may be used as a level for stop loss.
    ASX 200 Daily – Short positions below 6715.00 with targets at 6445.00 & 6320.00.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    CRUDE OIL 30 Minute – Long positions above 53.96 with targets at 55.94 & 56.50.

    AUDJPY 30 Minute – Buy above 70.95, rebound towards 71.53.

    GBPUSD Daily – Short positions below 1.2225 with targets at 1.1950 & 1.1800.

    SILVER Daily – Long positions above 16.3500 with targets at 17.7000 & 18.2000.

    HANG SENG Daily – Short positions below 26920 with targets at 25400 & 24550.

    AUDNZD Daily – Our next up target stands at 1.0690.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    Economic Announcements
    (times in AEST)

    Risk Warning
    Trading FX and CFDs involves a substantial degree of risk and should only be undertaken with risk capital. Please consider our PDS and FSG before trading with us. A copy can be found on our website Forex Capital Trading Pty Ltd provides general advice that does not take into account your objectives, financial situation or needs. Investors do not own or have rights to underlying assets. Forex Capital Trading Pty Ltd is regulated by ASIC (AFSL 306400), ABN (69119086270). Forex Capital Trading Pty Ltd’s AFS license and Australian regulation only applies to the financial services being provided in Australia only.

    Posted: August 13, 2019 | 5:44 AM