RBA September Preview and the Aussie

September 1, 2015

RBA Preview:
Here we go with another big RBA Tuesday on the cards today!

Not only do we get an RBA rate decision, but also a deluge of AUD sensitive data including Aussie Building Approvals and multiple Chinese Manufacturing PMI’s.

The Reserve Bank of Australia is expected to keep rates on hold through this meeting and into the near future, with US and Chinese market turmoil not seen as enough to tilt their hand from the current domestic data focus.

All 16 surveyed economists are expecting ‘no change’ this afternoon but last week’s tumultuous trading has seen some quiet chatter about whether today could possibly be live.

“AUD Cash Rate – Expected to be left on hold at 2.00%.”

Heading into today’s RBA rate decision, we yesterday took a look at where AUD/USD higher time frame charts sit from a technical analysis point of view.

AUD/USD Weekly:
au1
Click on chart to see a larger view.

AUD/USD Daily:
au4
Click on chart to see a larger view.

“Zooming into the AUD/USD daily chart, you can see the confluence of support around the level in question. You have weekly trend line support, daily channel support and a horizontal support zone. The fact that you have all three means that different types of traders are all looking at the same level for different reasons, but trading them in the same direction.”

Rhetoric out of Jackson Hole has been that the US isn’t going to jump at shadows and react to stock market corrections or the Chinese intervention roller-coaster. With this in mind, I just can’t see Stevens veering from the common sense approach either.

With this the last RBA decision before September FOMC, I’m expecting another wait and see month while continuing to leave out the easing bias that seems to have now been dropped.

———-

On the Calendar Tuesday:
CNY Manufacturing PMI
AUD Building Approvals m/m
CNY Caixin Final Manufacturing PMI
AUD Cash Rate
AUD RBA Rate Statement

GBP Manufacturing PMI
EUR Manufacturing PMIs

CAD GDP m/m
USD ISM Manufacturing PMI

———-

Chart of the Day:
After squeezing out of its range and clearing out stops and weak shorts, EUR/USD has pulled back just as hard again.

EUR/USD Daily:
eu1
Click on chart to see a larger view.

With the overall trend still bearish, we have a bit of a crunch area as price pulls back. On the daily chart, EUR/USD did manage to make a higher high, but the strength it was slapped back down with doesn’t give me a lot of confidence in a possible trend change.

EUR/USD 4 Hourly:
eu2
Click on chart to see a larger view.

Zooming into the 4 hourly, we have come back to re-test previous resistance as support. This is the first roadblock price has to go through if we are to come back down to form a lower high and get that possible trend change off its lows. If price can hold this level and move back up to highs then that is an extremely bullish signal.

Of course if this level fails then the alternate scenario is a resumption of the overall bearish trend and the parity target comes back into play.

Do you see opportunity in this EUR/USD re-test of previous resistance as support? Take advantage of the move on a Vantage FX RAW ECN Account.

Dane Williams – @VantageFX

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