Jump to content

Market update: Australian dollar languished near lows after RBA pauses again


Recommended Posts

The Australian dollar bumper around after the RBA left rates unchanged at 4.10%; the last move by Philip Lowe was in line with market pricing and economist forecasts and the new RBA governor has hurdles ahead.

 

original-size.webpSource: Bloomberg

 

Daniel McCarthy | Strategist, | Publication date: Tuesday 05 September 2023

RBA keeps cash rate steady

The Australian dollar struggled to gain traction on Tuesday after the RBA left its cash rate at 4.10% as widely anticipated by the interest rate market and economists.

The Aussie had been battling going into the decision on slight risk aversion sentiment with equity markets seeing a soft day. The S&P/ASX 200 slid slightly lower from the open but steadied in the afternoon session and was little changed after the RBAs announcement.

Governor Philip Lowe's final decision

The accompanying statement on the monetary policy decision by Governor Philip Lowe cited notable risks around services inflation, the uncertainty around the laggard effects of tighter policy, household consumption and the economic outlook for China given the problems in its property sector.

The statement noted, “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks.”

This was Mr Lowe’s last decision as Governor, and he will hand over the reins in a fortnight to Michelle Bullock.

Ms Bullock has been the Deputy Governor of the bank since April 2022 and has been with the institution since 1985. She has a reputation as a leading economist in her own right.

The appointment is mostly viewed as a steady transfer of leadership at a critical time for monetary policy at the RBA and her recent remarks point toward a similar approach to that of her predecessors.

AUD/USD reaction to monetary policy

Going into today’s monetary policy decision, AUD/USD had been slipping lower as the US dollar strengthened across the board, despite a holiday there overnight.

Perhaps undermining the Aussie, headline current account figures missed estimates earlier today. However, on closer inspection, the statistics could be seen as neutral, given the upward revisions to the prior reading.

In addition, net exports as a percentage of GDP were robust through the second quarter. This points towards another stellar trade surplus that will be released on Thursday.

Australian data today

 

original-size.webpSource: DailyFX

China's struggles and Australia's GDP projections

Elsewhere in Asia today, China’s attempts to reignite its economy continue to struggle to get off the ground with the Caixin services PMI missing estimates today, further highlighting the RBA’s concerns.

It came in at 51.8 for June, rather than the 53.5 anticipated and 54.1 previously. The composite PMI was 51.7 against 51.9 prior.

On Wednesday, 2Q Australian quarter-on-quarter GDP is forecast to be 0.3% against 0.2% previously. Annual GDP to the end of July is anticipated to be 1.8% against the prior read of 2.3% as the base effect kicks in.

AUD/USD one minute chart price reaction to RBA hike

 

original-size.webpSource: 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.

Link to comment

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 account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Corn Elliott wave analysis Function - Trend  Mode - Counter-Trend Structure - Expecting Impulse Wave  Position - Wave 2 Direction - Wave 3 Details - Wave 2 may not drop inside the 419-413 support zone where we expected it to end. Perhaps it has been completed with the surge to 438’4 and the subsequent corrective response. Wave 3 is probably in play and will be confirmed by the breach above 438’4. However, a double three corrective pattern into the zone is still likely. So we need an important impulse break upwards to confirm wave 2 has ended. Between 26 February and 13 March 2024, Corn gained over 12%. However, that’s merely a 17% recovery of the April 2022-to-February 2024 sell-off. Thus, there is still some way upside to go. From the Elliott wave perspective, it seems the current recovery will extend higher into the 22-month sell-off. By projection, the price might correct up to 571-623 Fibonacci retracement area. Today’s commodity blog post intends to show traders how to gain from this bullish corrective cycle. On the daily chart, from 824, we identified a corrective decline from April 2022 down to 394 in February 2024. Ideally, an impulse wave should follow to break above 824 in the long term. However, in this case, we will consider a 3-wave corrective bounce at first, and if the price supports, an impulse later. Currently, the price is in blue wave ‘A’ of blue wave ’1’ (both circled). We expect either to start with an impulse wave. On the H4 time frame, we can see the sub-waves of the current bounce better. On the H4 chart, a rally from 394 has completed the first impulse - wave 1. This is an indication that we may be right with the expected strong corrective rally or a long-term bullish impulse. From the end of wave 1, wave 2 has emerged and is quite debatable in the way it’s being structured. We expected wave 2 to end in the 419-413 key support zone. However, it appears wave 2 has ended with an expanding flat pattern. Flats can be quite tricky and can quickly transform a different pattern. Two ways to confirm wave 3 has started: 1. price breaks above blue wave ‘b’ of 2 high and  2. an impulsive break above 438 If the price confirms the end of wave 2, we should see wave 3 between 492 and 515 or maybe even higher. Thus, there’s more room to the upside for buyers to explore. However, if wave 3 is not confirmed, a further dip into the 419-423 or even lower shouldn’t come as a surprise. Technical Analyst : Sanmi Adeagbo Source : Tradinglounge.com get trial!    
    • Fears of a wider regional conflict in the Middle East weighed on market sentiment overnight, though a higher open is expected for the Dax. This flight to safety was triggered by news of an Iranian strike on Israel with hundreds of drones and missiles, raising concerns over potential Israeli retaliation. Safe-haven assets like gold and the US dollar strengthened, though the Japanese yen weakened to a 30-year low against the dollar, highlighting that interest rates remain the primary market focus despite geopolitical risks. Oil prices dipped in Asian trading as the risk of Iranian retaliation was already priced in last week. While the US has stated it will not take part in a counter-offensive against Iran, the volatility index remains near five-month highs, reflecting heightened market nervousness. Any further oil price increases could add to inflationary pressures, complicating central banks' efforts to control rising consumer prices. This week, markets will closely watch US economic data releases, including retail sales and comments from Federal Reserve officials, for clues on the monetary policy outlook amid persistent inflation concerns. The US earnings season is also underway, with mixed results from major banks getting the season off to a lacklustre start.  
    • TXN Elliott Wave Analysis Trading Lounge Daily Chart, Texas Instruments Inc., (TXN) Daily Chart TXN Elliott Wave Technical Analysis   FUNCTION: Trend MODE: Impulsive STRUCTURE: Motive POSITION:  Minor wave 3 DIRECTION: Upside in wave 3.     DETAILS: We are looking at either an extension in Minor wav 3 in the making, or else we are still in wave {b} of 2. The most bearish scenario is the one where the move off the 140$ bottom is not a wave 1 and we are still in a larger degree correction.       TXN Elliott Wave Analysis Trading Lounge 4Hr Chart, Texas Instruments Inc., (TXN) 4Hr Chart TXN Elliott Wave Technical Analysis   FUNCTION: Counter Trend MODE: Corrective STRUCTURE: Flat POSITION: Wave {ii}   DIRECTION: Bottom in wave (c) of {ii}. DETAILS: We are looking at a clear three wave move in wave {ii} with a bottom soon to be in place, looking for the beginning of MGM2 at 165$ to provide support.               Welcome to our TXN Elliott Wave Analysis Trading Lounge, where we delve into Texas Instruments Inc. (TXN) using Elliott Wave Technical Analysis. Let's dissect the market dynamics on both the Daily Chart and the 4H Chart as of April 15, 2024. * TXN Elliott Wave Technical Analysis – Daily Chart* On the Daily Chart, our analysis reveals a trending market characterized by impulsive mode and motive structure, positioned in Minor wave 3. The direction indicates upside momentum in wave 3. However, we are considering two potential scenarios: either an extension in Minor wave 3 or still within wave {b} of 2. The most bearish scenario suggests that the move from the $140 bottom may not be a wave 1, implying a larger degree correction. * TXN Elliott Wave Technical Analysis – 4hr Chart* Here, we observe a counter trend market marked by corrective mode and flat structure, positioned in Wave {ii}. The direction hints at a bottom forming in wave (c) of {ii}. Our analysis identifies a clear three-wave move in wave {ii}, with a bottom expected soon. We anticipate support to emerge around the beginning of MGM2 at $165.   Technical Analyst : Alessio Barretta   Source : Tradinglounge.com get trial here!  
×
×
  • Create New...
us