Directfx admin

The RBA meets today to determine interest rates and monetary policy. The pause in rate rises may well be short-lived, as inflationary pressures force the Central Banks to act. The RBA is caught between ‘a rock and a hard place’ with extreme political pressure, to leave rates unchanged, while inflation forces action. The reluctance to act may result in mixed messages, in the narrative, but the action will make the banks position clear. The AUD will trade around 0.6650, prior to the decision later today.

Current Level: 0.5635 (1.7745)
Resistance: 0.5685 (1.7590)
Support: 0.5575 (1.7940)
Last Weeks Range: 0.5580-0.5630 (1.7920-1.7760)

UK inflation levels are highest of all the major Western economies and this is pushing extreme cost-of-living pressures. The Bank of England has accepted the challenge and imposed further interest rate rises, driving differentials and making the British Pound an attractive destination. The rising interest rates will inevitably cause damage in the British housing sector as mortgage rates spiral upwards.

Current Level: 0.4840 (2.0660)
Resistance: 0.4900 (2.0410)
Support: 0.4800 (2.0835)
Last Weeks Range: 0.4800-0.4830 (2.0835-2.0700)

The NZD bounced back against the AUD this week, but all will hinge on the RBA’s interest rate decision Tuesday. Inflation is a big problem and will probably compel the Central Bank to further raise interest rates, thus reducing the interest rate differentials, adding to downside pressures on the cross-rate.

Current Level: 0.9240 (1.0825)
Resistance: 0.9280 (1.0775)
Support: 0.9150 (1.0930)
Last Weeks Range: 0.9140-0.9220 (1.0940-1.0845)

Market confidence was on the rise, despite Western Central Banks hawkish monetary policy statements, resulting in equities surging to near record levels. Sentiment is strong and this allowed the reserve to soften and the NZD bounced back strongly to 0.6150. A shortened trading week in the USA, due to an extended Independence Day holiday, will result in an intense close to the trading week.

Current Level: 0.6145
Resistance: 0.6200
Support: 0.6050
Last Weeks Range: 0.6060-0.6130

Tuesday July 4
All Day CAD Bank Holiday
2:00am USD ISM Manufacturing PMI
Previous 46.9
2:00am USD ISM Manufacturing Prices
Previous 44.2
4:30pm AUD Cash Rate
Forecast 4.10%
Previous 4.10%
4:30pm AUD RBA Rate Statement

Wednesday July 5
All Day USD Bank Holiday
All Day All OPEC Meetings

Thursday July 6
6:00am USD FOMC Meeting Minutes
1:30pm AUD Trade Balance
Previous 11.16B Read more

Globally Central Banks are being forced into hawkish monetary policy, to tighten up the liquidity in the system and slow down inflationary growth. The Bank of England and ECB have confirmed further rate rises are on the way. The recession in Europe is killing demand and the Chinese recovery remains restrained, thus impacting commodity prices and the associated currencies.

All the attention now turns to tonight’s UK GDP number and the US PCE inflation indicator. The Fed’s Bank Stress tests passed with flying colours, but German inflation has turned north again, and any hint of a reversal in the US PCE number, will have dramatic consequences. Commodity currencies are feeling the impact of slower demand and recessionary pressures enveloping Europe and spreading around the world.

Globally Central Banks are being forced into hawkish monetary policy, to tighten up the liquidity in the system and slow down inflationary growth. The Bank of England and ECB have confirmed further rate rises are on the way. The recession in Europe is killing demand and the Chinese recovery remains restrained, thus impacting commodity prices and the associated currencies.

All the attention now turns to tonight’s UK GDP number and the US PCE inflation indicator. The Fed’s Bank Stress tests passed with flying colours, but German inflation has turned north again, and any hint of a reversal in the US PCE number, will have dramatic consequences. Commodity currencies are feeling the impact of slower demand and recessionary pressures enveloping Europe and spreading around the world.

The RBA had instituted a pause in interest rate rises, but heavy inflationary pressures, will ensure the Central bank returns to a more hawkish approach, to monetary policy. The heavily indebted nature of the Australian economy means this will have an impact on disposable income, spending and the consumer. The rise in the reserve currency, following hawkish statements from the Federal Reserve Chairman Powell, has seen the AUD tumble back to 0.6600.

Current Level: 0.6625
Support: 0.6550
Resistance: 0.6700

The UK inflation number was expected to fall dramatically, but instead remained stubbornly high, forcing the Bank of England to raise rates a further 50 basis points. In Europe inflation had been falling dramatically, until this week’s release of German inflation numbers. The German number actually reversed course, and rose, from 6.1% to 6.4%. The ECB has continued to commit to more rate rises, and joins all other major Central Banks, with a hawkish monetary policy stance.

Current Level: 0.5595 (1.7873)
Support: 0.5550 (1.8018)
Resistance: 0.5650 (1.7700)

The UK inflation number was expected to fall dramatically, but instead remained stubbornly high, forcing the Bank of England to raise rates a further 50 basis points. In Europe inflation had been falling dramatically, until this week’s release of German inflation numbers. The German number actually reversed course, and rose, from 6.1% to 6.4%. The ECB has continued to commit to more rate rises, and joins all other major Central Banks, with a hawkish monetary policy stance.

Current Level: 0.4820 (2.0747)
Support: 0.4800 (2.0833)
Resistance: 0.4900 (2.0410)