-
General Statistics
-
Total Topics22,081
-
Total Posts92,924
-
Total Members42,474
-
Most Online7,522
10/06/21 10:53
-
-
-
Posts
-
Following a flat April for retail sales and softer wages, market expectations lean towards the Reserve Bank of Australia holding rates steady at 3.85% - pending this week's Monthly CPI Indicator. Source: Bloomberg Forex AUD/USD United States dollar Consumer price index Australian dollar Retail Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 30 May 2023 Last week, the retail sales report for April became the latest economic release during May to show that the RBA’s rate hiking cycle is having the desired impact and slowing the economy. Attention now turns to the release of the Monthly CPI Indicator on Wednesday. To recap, retail sales were flat (0.0%) in April, below market expectations looking for a 0.3% rise. The subdued retail sales number followed weaker-than-expected wages and employment data earlier this month. At its monthly board meeting in May, the RBA surprised the market and raised the cash rate by 25bp to 3.85%. The RBA warned that it could again lift rates in June, but it would depend on how the economy and inflation evolved. An inline or softer-than-expected Australian Monthly CPI indicator would become the fourth data point this month to support current market pricing the RBA will keep rates on hold at 3.85% when it meets next week. What is expected? In March, the monthly CPI indicator rose by 6.3% YoY, falling from 6.8% in February. It was the third month in a row that the indicator has fallen, extending its decline from a peak of 8.4% in December. The softer print in March was mainly due to a softer pace in the growth in housing and transport prices. For April, the monthly CPI indicator is expected to rise by 6.4% YoY, driven by price rises in food, clothing and footwear, housing, and transport costs. The range of expectations varies from 5.9% to 6.6%. A print of 6.2% or less would be welcomed by the interest rate market fully priced for the RBA to remain on hold in June and a minor negative for the AUD/USD. A print of 6.6% or higher would likely see the market increase the chances of an RBA rate hike in June and be a slight positive for the AUD/USD. AUD/USD technical analysis The AUD/USD closed lower last week at .6517 (-2.01%), at fresh seven-month lows, courtesy of soft commodity prices, surging US yields and weak eco data in Australia and China. The break of range and year-to-date lows, the .6565 area, was a bearish development and warns of further losses towards .6350. One point of bearish concern is that the latest Commitment of Traders positioning report shows that the market is short the AUD/USD to the tune of about 50k contracts. An ability to reclaim resistance at .6620/40 would likely be enough to trigger a short-covering rally in the AUD/USD. AUD/USD daily chart Source: TradingView TradingView: the figures stated are as of May 30, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation. -
The Australian dollar busted the range last week but appears to be pausing; building approvals came in soft for April but AUD seems to be shrugging it off and the technical conditions might set up the next move for the Aussie. Source: Bloomberg Forex Shares AUD/USD Australian dollar Volatility United States dollar Daniel McCarthy | Strategist, | Publication date: Tuesday 30 May 2023 The Australian dollar remains buoyed on Tuesday despite some soft domestic data. Building approvals for April fell 8.1% month-on-month, below estimates of a 2% rise and -1.0% prior. The data may support the interest rate markets’ view that the RBA will leave rates unchanged at its monetary policy meeting next week. AUD/USD technical analysis AUD/USD broke out of the 0.6565 – 0.6818 range that it had been in for 3 months on its way to making a 6-month at 0.6490 last week. Prior to piercing the lower edge of that range, the Aussie had several attempts to break the topside but failed. These false breaks can be frustrating for traders trying to play the range. The run lower also saw the price move below the lower bound of the 21-day Simple Moving Average (SMA) based Bollinger Band. A break like this is sometimes viewed as a volatility breakout and the price action following such a move can provide clues for near-term direction. If the price remains outside the band, it might suggest that momentum is evolving in that direction, in this case, bearishness. However, a close back inside the band may indicate that there is a pause in the bear run or a possible reversal. AUD/USD closed back inside the band on Friday and saw modest gains to start this week. What is clear is that realised volatility has increased as evidenced by the widening of the Bollinger Band. Looking at the 1-month At-The-Money (ATM) implied volatility options price, the market has barely moved, currently trading a touch over 10%. This may suggest that currency markets are not overly concerned with this dip in the Aussie. Support could be at the recent low of 0.6490. Further down, support may lie at the prior low of 0.6387 and the nearby Fibonacci level of 0.6381. The latter is the 78.6% Fibonacci Retracement of the move from the low of 0.6170 to the peak of 0.7158. On the topside, resistance could be at the nearby breakpoints of 0.6565 and 0.6575 or the previous peaks of 0.6675 and 0.6710. Further up, the 0.6780 – 0.6820 area might offer a more significant resistance zone with several prior highs and breakpoints. Source: TradingView This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
-
Faltering Euro Area data fuels economic slowdown fears, even as UK's robust growth battles unyielding inflation. Source: Bloomberg Forex Indices Inflation United Kingdom FTSE 100 Euro Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 30 May 2023 The release of key economic data last week has increased suspicions that the European economy’s expansion is slowing while the UK continues to grapple with stubborn inflation. Euro Area data signals a slowing economy Last week, following the release of soggy industrial production data earlier this month, the Euro Area Composite PMI fell to 53.3 in May from 54.1 in April, mainly due to a deepening contraction in manufacturing (44.6 from 45.8). The Services PMI ticked lower to 55.9 from 56.2. Further fuelling slowdown suspicions last week, the German Ifo Business climate indicator fell to 91.7 in May from 93.6 in April. The fall was the index’s first monthly decline in six months. Expectations for the coming months were also more pessimistic, falling to 88.6 from 91.7 in April. UK's strong growth marred by stubborn inflation In the UK, activity this year has been stronger than most expected, supported by falling energy prices, a robust labour market and an elevated savings rate. However, while growth has been stronger than expected, so has inflation. Last week, headline inflation fell to 8.7% YoY in April, significantly stronger than the fall to 8.2% expected. The core rate, which excludes food and energy, jumped to 6.8%, the highest since March 1992 and above well forecasts of 6.2%. The UK rates market is now pricing four more 25bp rate hikes from the BoE for a terminal rate of 5.50% by year-end. DAX technical analysis Weaker than expected Euro Area data and debt ceiling concerns saw the DAX retreat from its all-time 16,375 high last week towards the key 15,700 support level (coming from the highs in February and March and uptrend support from the October 11,829 low). While the DAX holds above support at 15,700, a retest and break of recent highs is possible. However, should the DAX see a sustained break of support at 15,700, a deeper decline is expected to unfold towards year-to-date lows and the 200-day moving average 14,600/500 area. DAX daily chart Source: TradingView FTSE technical analysis The release of stubbornly high inflation data last week on top of debt ceiling concerns saw the FTSE pullback toward the 200-day moving average at 7526. While the FTSE remains above 7526, a rebound towards the resistance 7800/7900 area is possible. However, should the FTSE see a sustained break of the 200-day moving average at 7526, a deeper decline is expected towards support at 7300/7200, coming from year-to-date lows. FTSE daily chart Source: TradingView TradingView: the figures stated are as of May 30, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
-
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now