RBA left rates on hold at 1.5%, citing low inflation, Chinese growth and a two-speed economy as supporting reasons to stay on course with record low rates. RBA Governor Lowe expressed concerns overnight about home loaning criteria, as a lot of borrowers have skinny income buffers. He noted household debt being paid but he’s seeing impacts to consumer spending and retail sales.
The Aussie dollar popped slightly higher off the back of strong trade balance figures, however the RBA comments, further supported in the evening by Lowe, saw the currency fall to overnight lows of 0.7545, levels not seen since 14-March.
The Pound was heavily sold early in the European session yesterday as technical selling under the 1.250 level saw the market test 1.2418. The 1.2400 level is next support.
The EUR/USD showed some strength after finding support at the 1.065 level during recent sessions. Long positions will likely have stop losses at the swing low of 1.0635. Next resistance level at 1.0715
Early losses across indices were erased during the US session, with the DOW (+0.19%), S&P500 (+0.06%), NASDAQ (+0.07%). Gains were supported by Trumps tweet regarding deregulation of US banks. The market is focussed on Thursdays meeting between President Donald Trump and Chinese President Xi Jinping where Trade will be top of the agenda.
These moves saw Gold reverse gains on the session. Traders advised to keep an eye on the US dollar index (trading 100.39) and US equity markets this week for further direction on gold moves. Strong equities and US dollar should see Gold test the 1,244 support level. The 1,280 resistance level should come into play in the event of US concerns over Chinese trade and weak Non-Farm Payrolls.
Minor economic releases on the calendar in today’s Asian session.
Today’s economic calendar (AEST)
EUR & US Session:
From 5:15pm: Spanish, Italian French German PMI’s
6:30pm: British Services PMI
10:15pm: ADP Non-Farm Employment change
12:00am: ISM Non Manufacturing PMI
12:30am US Crude Oil Inventories
4:00am FOMC Meeting Minutes
