Aussie rally continues after Hong Kong extradition bill is withdrawn

The Australian dollar continued the rally started yesterday after the statistics office released the GDP data for the second quarter. The numbers showed that the economy expanded by a QoQ rate of 0.5% and an annualized rate of 1.4%. This was in line with the market expectations. The GDP final consumption for the quarter rose by 1.0% after rising by just 0.4% in the first quarter. Capital expenditure declined by -1.7% after declining by 0.7% in the previous quarter. This data came a day after the RBA released its interest rates decision. The rally today was also attributed to the withdrawal of the extradition bill in Hong Kong. This matters because China and Hong Kong are some of the biggest markets for Australian goods and services.

The sterling rose today as the Brexit drama continued in parliament. Yesterday, MPs voted against a no deal Brexit, in a blow to Boris Johnson. 20 conservative MPs voted together with the opposition parties. These members disagree with the approach taken by Johnson. However, while a no-deal Brexit will likely not happen on October 31, the continued uncertainty could dent the economy. This is because most companies are not investing as they fear a no-deal Brexit. Today, the services PMI data declined to 50.6 from the previous 51.0 while the composite PMI declined to 50.2 from the previous 50.7.

The euro rose today after positive PMI data from the European Union. In Germany, composite PMI increased to 51.7 from the previous 51.4 while the services PMI increased to 54.8 from the previous 54.4. In France, services PMI increased to 53.4 from the previous 53.3 while the composite PMI increased to 51.7. In the European Union, the composite PMI increased to 51.9 while the services PMI increased to 53.5. Meanwhile, retail sales in the region increased by 2.2%, which was better than the expected 2.0%. 

EUR/USD

The EUR/USD pair rose today to a high of 1.1023 after reaching a low of 1.1.0925. On the four-hour chart, the price is slightly above the 14-day and 28-day moving averages. The two averages seem close to crossing over, which is a sign that the trend could continue moving higher. This is confirmed by the RSI, which has risen from a low of 13 to the current 54. The accumulation/distribution indicator is alsomoving higher. The pair will likely continue moving higher, to test the important resistance level of 1.1050.

GBP/USD

The GBP/USD pair rose 1.2223, which is slightly higher than the 14-day and 28-day moving averages. The RSI has risen from the oversold level of 25 to the current 61. The momentum indicator has crossed the important level of 100. While the upward momentum could continue, Brexit uncertainties could make the pair relatively volatile. The key resistance level to watch will be 1.2315.

AUD/USD

The AUD/USD pair continued to rally after a series of positive economic data. The pair reached a high of 0.6790 after reaching a low of 0.6687 yesterday. The current price is the highest it has been since August 22. On the hourly chart, this price is close to the upper line of the Bollinger Bands while the RSI is slightly above the overbought level of 70. The accumulation/distribution indicator has been on an upward trend too. The pair will likely continue moving higher, although there could be a pullback at the current level.