AUSSIE RISES AFTER RBA LEAVES RATES UNCHANGED
The Australian dollar jumped after the Reserve Bank of Australia (RBA) released its monetary policy decision. As expected, the bank left interest rates unchanged at 1.50% and signaled that the policy will likely remain unchanged for some time. Last month, Australian data showed that the economy was doing well with low unemployment rate, high participation rate, and improved retail sales. However, the country continues to face the challenge of falling housing prices in Sydney and Melbourne. It is also facing the challenge of a prolonged drought in New South Wales, the country’s most populous state and one which provides the most food to the country.
The euro jumped against its key peers even after disappointing data from Germany. Yesterday, data from the country showed that factory orders had slumped to the lowest level since last year as impacts of the trade conflict emerged. Today, the data showed that the country’s industrial production had slumped by minus 0.9% in June. This was a deeper drop than the expected minus 0.5% decline and the 2.4% gain in May. In addition, the country’s trade balance was at 19.3 billion euros, which was lower than the expected 21.4 billion euros. This came as the country’s exports remained unchanged in June as imports increased by 1.2%.
The dollar index moved lower today as the US started implementing tariffs on Iran. These new tariffs will limit the country’s central bank from accessing dollars. It will also limit Iran’s exports of Persian rugs and its automotive industry. The sanctions were announced after the Trump administration exited the Joint Comprehensive Plan of Action (JCPOA). In an early morning tweet, the president announced that all companies doing business with Iran will be expected to exit if they wanted to do business with the United States. For smaller companies with no interest in the US market, they will continue doing business in Iran, but they will also find it challenging to bank their earnings.
The global stock rose today after a silent day about trade. In Europe, DAX, CAC, FTSE, and Stoxx rose by 1%, 0.85%, 1% and 0.90% respectively. In Asia, the Shanghai, Nikkei, and Hang Seng rose by 2.80%, 0.70%, and 1.50% respectively. The US markets signaled a high opening with the Dow, S&P, and Nasdaq futures gaining by 0.35%, 0.25%, and 0.30% respectively.
The EUR/USD pair rose to an intraday high of 1.1600. The rise came as traders hoped that the truce reached between the United States and EU will help reset the German economy. The current price is close to the 38.2% Fibonacci Retracement level as shown below. On the 30-minute chart below, the RSI has moved past the overbought position and is currently at 77. The pair could continue moving up but traders should watch out for the 1.1610 and 1.1640 levels which are the 38.2% and 50% Fibonacci Retracement levels respectively.
Starting from the end of May, the EUR/GBP has been moving higher, with higher highs and higher lows as shown below. The pair has moved from a low of 0.8695 and is currently trading at 0.8945. It is now trading above the 100 and 50-day Exponential Moving Averages. The Average Directional Index is at 34 and the pair is trading above the important support shown below. In the short term, traders should keep a watch on the important resistance level of 0.8955.
The AUD/USD pair jumped today after the monetary decision by the Reserve Bank of Australia. It reached an intraday high of 0.7437. Today’s surge led the pair to recoup most of the losses it sustained when it started its sharp decline on Wednesday last week. As it rose, the RSI reached a daily high of 86 and is currently at 78. Traders should watch out for the 0.7440 level which the pair reached on Wednesday last week.