RBA rate cut sets of AUD bulls

3 August, 2016

RBA rate cut sets of AUD bulls

As predicted the Reserve Bank of Australia looked to cut interest rates overnight in an effort to bolster the economy, the previous rate of 1.75% was cut 25 basis points to 1.50%. This was no surprise to the markets who had suspected that a rate cut would be on the cards in the short term to help the economy as it continued to battle low inflation and a sluggish economy. Building approval data was disappointing as it came in at -2.9% (0.8% exp) and trade balance data came in disappointing as well at -3.20B (-2.00B exp). These were minor movers didn't have the same level of impact though in relation to the rate cut which caused an adverse reaction to the market and actually saw a rally much to the surprise of pundits in the market.

The rally after the rate cut saw the AUDUSD climb to touch resistance at 0.7638, but this was quickly pushed back as the market looked to take profit. So far the market has reacted positively to the announcement and the rally has been outside what many would expect including myself which expected a dip in the AUD overall.  It's likely we will still see that dip in the long run and a push down to the 20 day moving average looks in line with the short term movements if we see strengthening in the USD as markets call for further rate cuts. Support levels at 0.7517 and 0.7472 are still prime targets for bears in the market looking for downside in the long run, and I expect to see markets make an attempt in the long run for these levels after the recent rate cut and talk from the RBA.

The S&P 500 has found itself under pressure yet again and this time the bears that I spoke about previously have come calling and looked to claw back some of the recent gains. Many are expecting the FED to look put pressure on the doves and up interest rates in the long run in an effort to return to normal monetary policy. This has been packed up by recent comments from the Fed's Lockhart saying "asset valuations at the moment particularly deserve watching as they are relatively high". The bounce down below resistance at 2168.50 has so far managed to hold out in the long run and I expect that it will continue to act as a ceiling in the short term. The push lower though has so far failed to push through support at 2152.11, I would expect this level in the short term to come under increasing pressure and for the market to look to push through here.

Lastly, oil markets continue to find a large amount of volatility. Recent private oil data has shown a draw down in crude inventories and if this carries onto the week it will enable the bulls to come back into the market and hold back bearish movements. 


Source link  
Oil swings back into focus

OPEC members have gathered in Vienna to discuss the current state of monitoring in the oil market and with non OPEC members as well...

Risk-on sentiment elevates global stocks

“Risk-on” was the name of the game during Monday’s trading session with World stocks marching into uncharted territories as tensions eased...

Monetary policies to remain at center stage

Sterling surged above $1.36 last week, reminding investors that central banks remain the strongest drivers of currency markets. GBPUSD has risen 3%...


US inflation data beats expectations

The US labour market and inflation data are looking all the more impressive after today's economic results - even Yellen in the FED will be taking notice...

Global tensions set to boost metals

North Korea is on the move again when it comes to upsetting the western world, as reports are now surfacing that they will test launch another ICBM...

S&P hits record high

The US economy continued another day of fighting back on the economic front as JOTLS job openings came in at 6.17M (6M exp) showcasing that the US labour market still has a lot...


USD beats monday blues

The dollar has begun a strong rally on the charts and US markets are surprisingly upbeat, most likely on the bipartisan actions that have occurred in the US...

USD - further sell-off or set for a rebound?

The dollar’s weakness and a surge in safe havens, were the central themes in the markets last week. The dollar index fell 1.4% in the past five trading days...

USD weakness continues

USD weakness was another strong theme in today's trading day as US economic data continues to disappoint - it's getting to the point...

  


Share: