Monetary Policy Meeting Minutes from the RBA is today’s economic calendar highlight, with an expectantly dovish market hanging on the words of Governor Glenn Stevens.
At the last RBA meeting earlier this month, the bank left interest rates unchanged at 1.75% and expressed concerns about global economic growth and uncertainty following the still fresh Brexit vote. But while the Aussie has rallied on a no cut since the meeting, it hasn’t done any technical damage because everyone knows the cut is most likely to come in August.
The higher time frame AUD/USD trend line that we were looking to buy into has continued to hold as support.
Zooming into the intra-day chart and you can see price is still in a bit of no-man’s-land. Sitting in the middle of a short term bullish channel as well as not really close enough to that higher time frame triangle to easily manage our risk.
The fact that we are still in a higher time frame bullish trend helps with the path of least resistance being a continuation of this channel. With an impending August rate cut being known about and priced in, any dovish confusion could present a buying opportunity closer to channel support. On the other hand, if the RBA’s previous policy meeting rhetoric disappoints an expectantly dovish market, then the bigger move is likely to be to the upside.
For those of you playing along at home with us on the @VantageFX Twitter feed, the final paragraph of the previous statement as follows will be where trader’s eyes first go to, in search of any changes or clues to future monetary policy direction;
“Further information should allow the Board to refine its assessment of the outlook for growth and inflation and make any adjustment to the stance of policy that may be appropriate.”
Across the ditch and the Kiwi/Dollar has been the in play pair to start the week.
The pair immediately dropped around 70 pips straight into support following yesterday morning’s CPI miss with a 0.4% print missing the 0.5% expectations. This miss has gained further significance because of the extra economic update this week that the RBNZ has signalled to the market.
Price reacted as expected at the previous support level, respecting the level momentarily, but momentum being too strong and pushing the pair through support on thismorning’s proposal to tighten rental property lending to investors across the country from September 1.
Next stop is is the previously closed gap which has seen a few bounces in the past, but below that we start to see some white open space to fall into.
Watch your levels, trade your levels and share a chart or two over on the @VantageFX Twitter feed!
On the Calendar Tuesday:
AUD Monetary Policy Meeting Minutes
GBP CPI y/y
EUR German ZEW Economic Sentiment
USD Building Permits
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Dane Williams – @VantageFX
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