As was widely expected, RBA kept its interest rates at +1.50% and AUD got some support as it rose against the USD. The accompanying statement cites the positive side low unemployment and maintains its forecast for GDP growth to average “a bit above 3.0% in 2018,2019”. On the flip side, it mentions that wages growth remains low and household consumption remains a source of uncertainty. Analysts commented that the support for the AUD may stem from the bank maintaining the same position for international trade tensions, without entering into a more negative view. We could see the AUD picking up somewhat, should the positive momentum be maintained.
AUD/USD moved in a sideways manner yesterday and got some support after the release of RBA’s interest rate decision, breaking the 0.7200 (R1) resistance line, now turned to support. Technically, it should be noted that the pair, broke clearly the downward trend-line it had incepted since the 29th of August, hence we lift our bearish bias in favor of a sideways movement. Also, note that the RSI indicator in the 4-hour chart was lifted from the reading of 30. Should the pair be in the buying interest of the market, we could see it breaking the 0.7265 (R1) resistance line, aiming for the 0.7325 (R2) resistance hurdle. Should the pair come under selling interest, we could see it breaking the 0.7200 (S1) support line and aim for the 0.7160 (S2) support barrier.
USD continues its rise as further tariffs loom
USD, strengthened against a number of its counterparts yesterday, acting as a safe haven. The USD’s positioning as the world’s reserve currency seems to have safe haven qualities at the time, as the markets are in disorder. The situation seems to escalate as the comment period for the new US tariffs on Chinese imports, ends on Thursday. Analysts, point out that the USD and the Yen, typical safe havens are supported by the confusion in the rest of the world. Should there be further headlines on trade tensions, we might see USD strengthening further.
Staying in commodity currency pairs, USD/CAD continued to rise yesterday and during today’s Asian session, breaking consecutively the 1.3070 (S2) and the 1.3100 (S1) resistance lines, now turned to support. Should the pair clearly break the upward trend-line it incepted since the 30th of August, we would favour a sideways scenario for the pair. Also, please note, that the RSI indicator in the 4hour chart has reached and slightly crossed the reading of 70, implying an overcrowded long position. Should the bulls continue to dictate the pair’s direction, we could see it breaking the 1.3137 (R1) resistance level, while if the bears take over, we could see the pair breaking the 1.3100 (S1) support line and aim if not break the 1.3070 (S2) support level.
In today’s economic highlights:
During the European session, we get from Switzerland the CPI rate, while from the UK the construction PMI both for August. In the American session, we get the US ISM Manufacturing PMI for August. As for speakers, RBA governor Philip Lowe and BoE governor Mark Carney speaks.
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