Major Currencies May Enter Consolidation on Absent Event Risk

Currency markets may enter into consolidation mode, taking an opportunity to digest recent volatility amid a lull in top-tier scheduled event risk.

Talking Points

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  Australian Dollar Sinks as RBA Cuts Key Interest Rate to Record Low
  


• 
  Soft German Factory Orders Report May Damage Euro on ECB Bets
  

The Australian Dollar underperformed after the Reserve Bank of Australia cut its benchmark interest rate to a record low at 2.75 percent, as expected. The currency slid as much as 0.8 percent on average against its top counterparts. Traders are now pricing in another 25bps reduction at the June meeting and at least one further cut beyond that over the coming 12 months.

The economic calendar is relatively quiet in European trading hours, with Germany’s Factory Orders report amounting to the only bit of noteworthy event risk on the docket. Expectations call for a 2.9 percent year-on-year decline in March, marking the worst performance in six months. A soft print may reinforce overnight comments from ECB President Mario Draghi, who said the central bank may cut rates again if needed, and put downward pressure on the Euro.

On the risk sentiment front, S&P 500 index futures are trading flat and offer little guidance on the trajectory of risk appetite. The US economic calendar offers very little in terms of scheduled event risk to drive price action, hinting a period of consolidation may settle over the markets as investors digest recent volatility.

Asia Session:

Euro Session:

Critical Levels:

— Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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Major Currencies May Enter Consolidation on Absent Event Risk