News & Analysis
Strong US outlook manufacturing data drives USD overnight; RBA cash rate
Major economic data releases for today:
▸ 14:30 AEST – RBA Statement Cash Rate
▸ 19:30 AEST – Construction PMI
▸ Bank holidays in Germany and China
Overnight, the USD continued its run adding gains to the EURO and GOLD. The drive came from the ISM Manufacturing PMI which came in a lot higher than expected at 60.8. The FED has confirmed they believe 2.7% GDP growth in the third quarter should be achievable. These combined with the tax plan are keeping the USD very optimistic. Today the RBA meets for the Australian cash rate, the market is looking for the RBA to hold rates at 1.50%. The RBA statement and cash rate will be released at 14:30 this afternoon. We think the RBA will keep rates at 1.50%.
EURO lost ground overnight due to the Catalan Independence vote. Falls to mayors and crosses sellers exited due to uncertainty. The EURUSD lost 56 pips to finish at last week’s lows. Support seen at 1.1717 sellers currently just above. With a test we would be looking for short-term resistance from buyers from that point.
XAUUSD had another strong move down as the USD bite into its strength. Gold has lost $78 since September, trading below the 50% Fibo point and fast approaching the 61.8% point. Price is currently testing 1271 support level. If we fail to see buyers reverse the current trend, pressure is mounting on the overall uptrend as normally once the 61.8% breaks the trend is considered finished.