Danielle Lowe

Oil and commodities prices drag down Aussie dollar

Share Markets:

It was a relatively quiet session in equity markets.

There was little on the economic data calendar influence markets, and investors are awaiting a decision by the Federal Reserve on monetary policy on Wednesday night.

Oil however, continued to impact on sentiment. A fall in prices weighed on energy stocks, but was offset by gains in other sectors.

The broader European index was higher. The Dow rose 0.1%, but the S&P500 fell 0.1%.

Interest Rates:

US treasury yields fell, possibly tracking euro zone yields lower. European bonds yields were lower on the back of the European Central Bank's quantitative easing program. 

Australian 3 and 10-year bond yields based on futures both fell 4 basis points to 2.07% and 2.66%, respectively.

Foreign Exchange:

The US dollar index edged higher ahead of the Federal Reserve policy meeting.

It is widely expected to keep interest rate settings unchanged, but is likely to signal increases down the track. The euro lost most of its gains after ECB president Draghi signalled interest rates would not be lowered any further.

After climbing to an eight-month high of US$0.7594 yesterday, the Australian dollar lost ground overnight, tracking the fall in prices of oil and other commodities.

However, at US$0.7514 at the time of writing, the AUD remains more than 9% higher than its lows hit in January.


Oil prices dropped, on renewed concerns about rising US stockpiles. Gold, copper and the broader CRB commodity price index was down.

Iron ore prices also weakened further after last week's big spike, reflecting a softening steel outlook.


No domestic data to report.


Industrial production rose 2.1% in January, more than the median estimate for a 1.7% rise.

It followed a revised 0.5% in December. The annual rate picked up to 2.8%, which was the strongest since late 2011.

It provides a reminder that the euro zone economy is still growing modestly, although well below trend.


Machine orders jumped 15.0% January, following a downwardly revised increase of 1.0% in December (previously reported as a 4.2% increase).

This was the strongest monthly rise since these records began in 2005. For the year to January, machine orders are up 8.4%, after falling 3.6% in the year to December.

United States:

No data to report.

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