The RBA remained on hold at +1.50% as was widely expected and the Aussie got a small boost during today’s Asian session. There were no major changes in the accompanying statement and more or less the bank denied the markets a dovish turn. Main highlights of the accompanying statement, could include the comment about inflation being stable and expected to have a gradual progress, as well as employment market remaining strong. Also the central scenario of the bank includes the economy to grow around 3% in 2019. On the downside, the bank mentions that the economy has slowed down in the second half of 2018 and that trade tensions remain a source of uncertainty. Analysts point out that the bank refrained to take another dovish stance, however the focus remains on a potential easing, keeping the AUD on the defensive. Overall, we would like to add that despite data deteriorating the bank seems to remain in a rather comfortable position. Our main focus now, is on the release of Australia’s GDP rate, as well as RBA governor Lowe’s speech, both early in tomorrow’s Asian session. AUD/USD got some support during today’s Asian session, yet overall remained on the defensive testing the 0.7065 (S1) support line. Should the AUD remain on the defensive as mentioned, we could see the pair having some bearish tendencies today. Should the bears dictate the pair’s direction, we could see it breaking the 0.7065 (S1) support line and aim for the 0.6985 (S2) support barrier. Should on the other hand the bulls take over, we could see the pair aiming if not breaking the 0.7150 (R1) resistance line.
GBP weakens on soft data and Brexit developments.
The pound weakened on Monday, as a soft Construction PMI was released and UK officials head towards Brussels. UK’s Attorney General Geoffrey Cox is about to negotiate legally binding changes for the Irish backstop in Brussels, yet hopes remain low. On the other hand the EU doesn’t seem convinced and seems to be pushing for a solution based on arbitration. In the inner UK political stage, media reports state that London may be softening its demands towards Brussels and if so, Theresa May could be running into trouble with her own party’s hard Brexiteers. We expect the pound to remain under pressure, especially as the Services PMI release today could also bear a soft result. Cable dropped yesterday breaking the 1.3175 (R1) support line (now turned to resistance). We could see the pair maintaining the bearish momentum for the day, as financial releases today may weaken the pound and strengthen the USD. Should the pair remain under the selling interest of the market, we could see it aiming if not breaking the 1.3070 (S1) support line. Should on the other hand the market favor the pair’s long positions, we could see it breaking the 1.3175 (R1) resistance line and aim for the 1.3270 (R2) resistance hurdle.
Today’s other economic highlights
In today’s European session we get Eurozone’s final Composite PMI for February, along with a number of final PMI readings affecting the common currency. Also we get UK’s Services PMI for February and Eurozone’s retail sales growth rate for January. In the American session we get from the US the ISM non-manufacturing PMI for February and the API weekly crude oil inventories figure. As for speakers please note that BoE’s governor Mark Carney will be participating in the House of Lords Economic Affairs Committee hearing and could create some Brexit volatility for the pound . Also from the US side, Boston Fed President Eric Rosengren, Minneapolis Fed President Neel Kashkari and Richmond Fed President Thomas Barkin speak.
GBP/USD
Support: 1.3070 (S1), 1.2990 (S2), 1.2900 (S3)
Resistance: 1.3175 (R1), 1.3270 (R2), 1.3360 (R3)
AUD/USD H4
Support: 0.7065 (S1), 0.6985 (S2), 0.6915 (S3)
Resistance: 0.7150 (R1), 0.7230 (R2), 0.7330 (R3)
