Eyes on the RBA: AUD/USD and AUD/JPY Levels
The eyes of the Forex world shift across to the local scene here in Australia today, with the latest RBA rates decision the highlight on the economic calendar.
While today’s decision isn’t expected to deliver a cut, looking at the guidance for next meeting is where the price action will come from.
If we remember back a couple of weeks ago in this morning blog, we spoke about Australian Prime Minister Turnbull throwing a spanner into the works of the AUD/USD trading machine:
“What to expect from Glenn Stevens and the Aussie Dollar changed dramatically yesterday, as Australian Prime Minister Malcolm Turnbull announced that parliament would be recalled early to try to push Australian Building and Construction Commission legislation through the senate ASAP.”
“If the bill doesn’t go through the senate then an early federal election will be called. A Federal election campaign that the RBA will surely at all costs avoid cutting rates in the midst of.”
What I didn’t speak about however, was that the next RBA rate decision in May actually falls on the day the Australian Federal Budget is released.
My thinking would be that again, the RBA’s track record says that they are much more likely to sit on their hands come May, but the economist survey actually goes from a unanimous ‘hold’ decision today, to a 25% cut in May. Do you follow the smartest guys in the room, or do you avoid them…?
The 4 hourly is approaching the bottom of a lower time frame bullish channel. I like this because the red horizontal support/resistance level that just happens to line up with the bottom of the channel is a weekly level here:
Price has chopped through it both up and down recently on the lower time frame which weakens the level, but it is a noticeable level of confluence which could very well come into play today/
Chart of the Day:
These Aussie feature blogs seem to always have AUD/JPY as my go to ‘alternate’ currency pair and the trend continues today. The trend is your friend, as they do say!
The daily shows a huge bearish channel which is pretty self explanatory.
Within that channel we have a couple of lower time frame, bullish levels to manage our risk around. This is where you need to make a trading decision. Do you fade into the short term level, or do you play for an early breakout lower, banking that the higher time frame resistance level that price has come out of on the daily chart above is the main one.
Let us know on the @VantageFX Twitter heading into the RBA decision? It is #TuesdayFX afterall!
On the Calendar Tuesday:
AUD Trade Balance
AUD Cash Rate
AUD RBA Rate Statement
GBP Services PMI
CAD Trade Balance
USD ISM Non-Manufacturing PMI
NZD GDT Price Index
Dane Williams – @VantageFX
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