AUD/USD: RBA Form Guide

November 1, 2016

With Victoria on holidays and the rest of the country on holidays, be aware that Australian markets might be a little unpredictable today.

In saying that however, just take a look at that calendar section down the bottom of the blog positively jam packed with tier one data throughout every trading session today. Wow!

The Asian highlight of course being the Reserve Bank of Australia’s November interest rate decision, but don’t discount the ability of the early Chinese data or the Bank of Japan’s stimulus decision’s ability to keep markets moving.

Futures markets see no chance of a rate cut by the RBA, pricing in a less than 5% chance they make another move. On the other hand though, an unusually high 6 out of 27 economists surveyed by Bloomberg have indicated that they expect a cut. For just a 5% priced in move, that is an unusually high number…

While last week’s headline inflation number might not have been too bad, the core number continued to slide and if the RBA wants to get some bang for their buck so to say, the markets are ripe for the taking.

My thinking is still that traders don’t quite know how to interpret the RBA’s new statement on the conduct on monetary policy and that while under the previous agreement this may have been more of a sure cut, things have changed.

AUD/USD Daily:
161101_audusd_daily
Click on chart to see a larger view.

Taking a look at the AUD/USD daily, with price sitting at resistance for so long, if they do cut then that’s goodnight. If you’re the type of trader who looks to put yourself in a position to take advantage of these big re-pricing moves, then this is where you’d want to be.

On the other hand, if things remain as is, then the slow grind up will most likely continue into the Fed’s December meeting. Your call.

Moving onto the next in-play chart and the other big central bank story that we haven’t mentioned on this blog is the Bank of England boss Mark Carney indicating that he will extend his time as Governor by one year to 2019.

Carney hasn’t exactly seen eye to eye with politicians in a post-Brexit UK and while GBP/USD is rallying on him staying on for stability’s sake, there was some thinking that if he were to leave, then Cable may have actually rallied harder because a more hawkish and less independent successor may have been appointed. Doesn’t really matter now I guess, but there is just no way I can get excited about a bullish Cable.

GBP/USD Daily:
161101_gbpusd_daily
Click on chart to see a larger view.

You can see the little bounce off support on the daily, but that looks pretty bear flaggish to me.

Finally, for those of you in Australia, enjoy your Melbourne Cup day: Best of luck in your punting and best of probabilities in your trading.

See the difference?

———

On the Calendar Tuesday:
What an absolutely PACKED economic calendar we have today. And these are just the tier one releases!

CNY Manufacturing PMI
CNY Caixin Manufacturing PMI
AUD Cash Rate
AUD RBA Rate Statement
Flemington Race 7
JPY BOJ Outlook Report
JPY BOJ Policy Rate
JPY Monetary Policy Statement
JPY BOJ Press Conference

EUR French Bank Holiday: French banks will be closed in observance of All Saints Day
EUR Italian Bank Holiday: Italian banks will be closed in observance of All Saints Day
GBP Manufacturing PMI

CAD GDP m/m
USD ISM Manufacturing PMI
NZD GDT Price Index
CAD BOC Gov Poloz Speaks

Take advantage of opportunity in the market with a Vantage FX RAW ECN Account.

Dane Williams – @VantageFX

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