Australian dollar soars ahead of RBA interest rate decision
The Australian dollar soared to the highest level since January as the market waited for the RBA interest rate decision that will be released tomorrow. Analysts expect the bank to leave interest rates unchanged at 0.25% and commit to slow the asset purchases. That is partly because the country’s economy is stabilising. Data released earlier today showed that the manufacturing PMI in the country rose from the previous 35.8 to 41.6. According to Markit, the manufacturing PMI in China rose from the previous 49.4 to 50.7. China is important for Australia because that is where it exports more than 70% of its goods.
The euro declined as investors reacted to the weak manufacturing PMI data from the eurozone. The numbers showed that the manufacturing PMI increased from the previous 33.4 to 36.6. That was lower than the consensus estimates of 39.5. In Spain the PMI increased from the previous 30.8 to 38.3, in Italy, the PMI rose from 31.1 to 45.4 and in France, the PMI rose from the previous 31.5 to 40.6. While the overall manufacturing activity in the eurozone disappointed, it showed that the region had bottomed.
US futures declined as riots intensified in most cities. Futures tied to the Dow Jones and Nasdaq declined by 36 points and 38 points, respectively. Most companies like Target, Apple, and Whole Foods have announced that they will scale back their operations in cities like Minneapolis and Washington. Worse, these riots are coming at a time when the US is facing the coronavirus pandemic that has killed more than 100,000 people.
The EUR/USD pair declined from a high of 1.1152 to an intraday low of 1.1100. On the hourly chart, this price is along the 50-day exponential moving averages while the RSI has moved from an intraday high of 70 to a low of 45. Therefore, the pair may continue falling as bears attempt to retest the 23.6% Fibonacci retracement level of 1.1065.
The AUD/USD pair rose to an intraday high of 0.6775, which was the highest it has been since February. The RSI has moved close to the overbought level of 70 while the price is above the 61.8% Fibonacci retracement level. It is also slightly above the 50-day and 100-day exponential moving averages. The pair may continue rising as bulls approach the important resistance of 1.6900. However, the price may see some volatility ahead of the RBA interest rate decision.
The XBR/USD pair rose to an intraday high of 38.40 as the market reacted to the sliding oil rigs in the United States. On the daily chart, the price is slightly below the 50% Fibonacci Retracement level. It is also slightly above the 50-day and 100-day exponential moving average while the price is above the Ichimoku cloud. The price may continue rising as bulls attempt to test the 50% retracement at 39.38.