RBA remained on hold at +1.50% as was widely expected with little change to the accompanying statement in comparison to last month. Main highlights that could be mentioned would be the progress on unemployment and that inflation acceleration is expected to be gradual. Also as for growth rates, the GDP was revised up a little for 2018 and 2019 (to average 3.5%), before slowing in 2020. We haven’t seen any intentions for changes by the bank and hence we continue to see the Aussie as being driven by the US-Sino trade war, as well as any Australian financial releases.
AUD/USD rose breaking the 0.7200 (S1) resistance line (now turned to support). We could see the pair trading in a sideways manner today however it might prove sensitive to any headlines regarding the US-Sino trade relationships, as well as the US midterm elections. Should the bulls continue to dictate the pair’s direction, we could see it breaking the 0.7240 (R1) resistance line and aim for higher grounds. Should on the other hand, the bears take over we could see it breaking the 0.7200 (S1) support line and aim for the 0.7160 (S2) support area.
USD braces for midterm elections
The USD remained in rather narrow ranges as the midterm elections are to take place in the US. The stakes are high, as a possible win of the Democrats in either of the two houses could curtail US President Trump’s powers substantially. Currently, opinions of analysts seem to converge that probably the Democrats may be winning over the House of Representatives while the Republicans maintain the majority in the Senate. It should be noted though, that analysts also point out that the market may be increasingly pricing in the possibility of a victory for the Republicans. Should there be a clear republican victory in both Houses, USD could be boosted, as US treasury yields could rise substantially. Volatility could be expected for the USD during and right after the elections as uncertainty may rise.
EUR/USD rose yesterday, clearly breaking the 1.1385 (S1) resistance line (now turned to support) and stabilised during the Asian session. We could see the pair continuing trading in a sideways manner today, however the pair may have a noticeable reaction to today’s financial releases and also prove sensitive to any headlines regarding the US midterm elections. Should the pair come under the market’s selling interest, we could see it breaking the 1.1385 (S1) support line, while if it finds fresh buying orders along its path we could see it breaking the 1.1430 (R1) resistance line and aim for the 1.1480 (R2) resistance hurdle.
In today’s other economic highlights:
In the European session today, we get Germany’s industrial orders growth rate for September, Eurozone’s final release of the PMIs for October, as well as the PPI rate for September. During the American session, we get New Zealand’s milk auctions figure and Canada’s building permits growth rate for September. Late in the American session we get New Zealand’s employment data for Q3 and from the US, the API weekly crude oil inventories figure. Should the API weekly crude oil inventories figure indicate another substantial slack in the US oil market we could see oil prices weakening even further. Should you be interested in more fundamentals about oil, please refer to our oil weekly outlook.
AUD/USD H4
Support: 0.7200 (S1), 0.7160 (S2), 0.7115 (S3)
Resistance: 0.7240 (R1), 0.7280 (R2), 0.7315 (R3)
EUR/USD 4H
Support: 1.1385 (S1), 1.1345 (S2), 1.1300 (S3)
Resistance: 1.1430 (R1), 1.1480 (R2), 1.1520 (R3)
