Australian dollar moves higher despite RBA interest rate cut
The Reserve Bank of Australia cut interest rates by 25 basis points this week, bringing the overall cash rate down to a record-low, one percent. The RBA decided to cut interest rates for a second consecutive month, as domestic unemployment rises and inflationary pressures remain weak. The Australian Dollar rose against the US dollar and the euro currencies, as traders and investors hoped that the rate cut would help stabilize the economy. Traders also turned bullish on the Aussie as markets believe that the RBA will probably not cut interest rates again this year.
∙ The AUDUSD pair is only bullish while trading above the 0.6960 level, key resistance is found at the 0.7070 and 0.7100 levels.
∙ If the AUDUSD pair trades below the 0.6960 level, sellers may test towards the 0.6935 and 0.6915 support levels
Bitcoin had a softer start to the new trading week and month than many analysts had been predicting, as the number one cryptocurrency fell below the $10,000 support level. Large scale profit taking put the BTCUSD pair under pressure towards the $9,500 level, marking a forty percent decline for the cryptocurrency in just under a week. The overallmarket sentiment towards digital currencies remained more cautious this week, as Ethereum and Litecoin also struggled to find lasting bullish momentum after they briefly dipped below key short-term support.
- The BTCUSD pair is bullish while trading above the $10,800 level, key resistance is found at the $13,000 and $14,000 levels.
- If the BTCUSD pair trades below the $10,800 level, key support is located at the $10,000 and $9,600 levels.
UK data declines
The United Kingdom posted a series of much weaker than expected macroeconomic data points this weak, with PMI numbers for June vastly underperforming. UK Manufacturing and Construction PMI data contracted during the month of June, while the UK service sector PMI narrowly avoided contraction. The British pound declined heavily against the US dollar and the Japanese yen as data points widely missed economists forecasts. The British pound also suffered, as Bank of England Governor Mark Carney delivered a dovish speech concerning possible monetary policy stimulus for the struggling UK economy.
- The GBPUSD pair is bearish while trading below the 1.2660 level, key support is found at the 1.2505 and 1.2450 levels.
- If the GBPUSD pair trades above the 1.2660 level, buyers may test towards the 1.2710 and 1.2780 resistance levels.
The euro currency fell against the US dollar this week after the G20 summit helped to improve risk-on trading sentiment and overall demand for the greenback. The EURUSD pair also suffered, as Christine Lagarde was named as the replacement for the current ECB President, Mario Draghi. Traders had expected hawkish central banker Jens Weidmann to be named as the new ECB President. The EURUSD pair fell well below the 1.1300 support level as traders now expect further policy easing measures from the European Central Bank this year.
- The EURUSD pair is only bullish while trading above the 1.1310 level, key resistance is found at the 1.1355 and 1.1410 levels.
- If the EURUSD pair trades below the 1.1310 level, key support is located at the 1.1255 and 1.1225 levels.