The Australian Dollar is in focus today as anticipation over whether the Reserve Bank of Australia will cut interest rate by 25bps remains a key moot point. Market is factoring in 53% chance of a cut with analysts and economists also split on the decision. With such a close call, volatility will ensue the AUD today; a hold by the RBA may push the AUD to 0.7760, while a cut likely to test 0.7550. Stevens’ forward guidance of interest rate trajectory in either cases will also be closely analysed.
We think the negative Q1 inflation print is not enough for the RBA to cut. Confirmation of deteriorating outlook with another local data turning south is likely to be required by the RBA before cutting rates. Last GDP data beats expectation with 3% growth year to year, with unemployment rate trending lower to 5.7% showing strength in the local economy. Arguments for cut are very reasonable still; inflation year to year at 1.3% is well below RBA’s 2-3% mandate, and failure to ease will return the AUD to elevated level which the RBA is uncomfortable at (as was the case last week with Bank of Japan and RBNZ’s no change in policy pushing the JPY and NZD respectively higher). After the RBA, Annual Government Budget is to be released, with Retail Sales, Trade Balance on Thursday, making it a busy week for the Australian Dollar.
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Trade AUD/USD Intraday: the downside prevails. |
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Pivot: 0.7685
Our preference: short positions below 0.7685 with targets @ 0.7610 & 0.7575 in extension.
Alternative scenario: above 0.7685 look for further upside with 0.7725 & 0.7765 as targets.
Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
Supports and resistances:
0.7765
0.7725
0.7685
0.7659 Last
0.7610
0.7575
0.7545
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Trade EUR/AUD Intraday: further advance. |
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Pivot: 1.4920
Our preference: long positions above 1.4920 with targets @ 1.5110 & 1.5200 in extension.
Alternative scenario: below 1.4920 look for further downside with 1.4800 & 1.4700 as targets.
Comment: the RSI is well directed.
Supports and resistances:
1.5310
1.5200
1.5110
1.5090 Last
1.4920
1.4800
1.4700
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Trade AUD/NZD intraday: rebound towards 1.093
Our pivot point stands at 1.085.
Our preference:rebound towards 1.093.
Alternative scenario: the downside breakout of 1.085 would call for 1.082 and 1.081.
Comment: the RSI is below its neutrality area at 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the pair stands below its 20 and 50 MAs (respectively at 1.0914 and 1.1013).
Supports and resistances:
1.096 **
1.095 *
1.093 **
1.092
1.08806 last
1.086
1.085 **
1.082 *
1.081 **
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Trade AUD/JPY Intraday: key resistance at 81.97.
Pivot: 81.97
Our preference: short positions below 81.97 with targets @ 80.72 & 80.35 in extension.
Alternative scenario: above 81.97 look for further upside with 83.23 & 84.28 as targets.
Comment: the RSI is capped by a strong resistance, posting bearish divergence (not confirmed yet).
Supports and resistances:
84.28
83.23
81.97
81.51 Last
80.72
80.35
79.80
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