On Tuesday, during the Asian session, RBA will announce its interest rate decision and is expected to remain on hold at +1.50%. Currently, AUD OIS imply a probability for the bank to remain on hold at 99.67%. As no interest rate movement is expected the market’s focus could shift to the accompanying statement. Considering the unemployment rate rising and reaching 5.6%, despite the bank’s predictions and the wage price index growth rate remaining at low levels, it could be the case that the bank will issue an accompanying statement with a rather dovish tone. Should there be a dovish tone in the accompanying statement we could see the AUD weakening.
AUD/USD traded in a sideways movement on Friday and today during the Asian session broke the 0.7575 (S1) resistance level, now turned to support. The pair could trade in a bullish market today as the AUD got a boost from the release of Australia’s retail sales growth rate. Also, the US factory orders growth rate, to be released in the American session, could weaken the USD in our opinion. The pair could prove sensitive to RBA’s interest rate decision tomorrow during the Asian session as the market could start positioning itself ahead of the release. Should the bulls take over we could see the pair breaking the upper boundary of the sideways movement at 0.7600 and aim for the 0.7680 (R1) resistance level. Should the bears take the reins we could see the pair breaking the 0.7575 (S1) support line and aim for the 0.7470 (S2) support area.
- Support: 0.7575(S1), 0.7470(S2), 0.7366(S3)
- Resistance: 0.7680(R1), 0.7820(R2), 0.7915(R3)
Amid fears over a possible trade war, China seems to be reaching out for Europe as it pledges to open further its economy. Chinese officials recently stated that “China and EU, now have a common stance against unilateralism and upholding the World Trade Organisation”. In other headlines, it seems to be the case that Germany is approaching France in an effort to overhaul EU relationships. Also, EU commission president Juncker stated that the bashing of Russia must stop, implying that a process for the normalisation of the EU-Russian relationships could begin. Should there be any further positive headlines about the EU we could see the common currency strengthening.
EUR/USD traded in a sideways manner on Friday and during today’s Asian morning between the 1.1715 (R1) resistance level and the 1.1640 (S1) support line. The pair could continue to trade in a sideways manner, however, we might see some bullish tendencies as the financial releases today might favor the EUR and weaken the greenback. Should the pair come under buying interest we could see it breaking the 1.1715 (R1) resistance line and aiming for the 1.1820 (R2) resistance level. Should the pair come under selling interest we could see it breaking the 1.1640 (S1) support line and aim for the 1.1550 (S2) support hurdle.
- Support: 1.1640(S1), 1.1550(S2), 1.1470(S3)
- Resistance: 1.1715(R1), 1.1820(R2), 1.1935(R3)
In today’s other economic highlights:
In the European session, we get Eurozone’s PPI for April while in the American session we get the US factory orders growth rate for April.
As for the rest of the week
On Tuesday, Australia’s Current account balance for Q1 and UK’s services PMI for May are due out.
On Wednesday, we get Australia’s GDP for Q1, the US trade balance for April and Canada’s trade balance for April.
On Thursday, Australia’s Trade balance for April and Eurozone’s GDP growth rate for Q1 are due out.
On Friday, Japan’s current account balance for April and GDP growth rate for Q1, China’s Trade balance for May as well as Canada’s employment data for May will be released.
On Saturday, China’s CPI and PPI rates for May are due out.
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