AUSSIE FALLS AS RBA LEAVES RATES UNCHANGED FOR 20 STRAIGHT MONTHS
The Australian dollar fell today after the Reserve Bank of Australia (RBA) released its interest rate decision. The bank left the base lending rate unchanged at 1.50% as expected. In the statement, the RBA Governor said that officials were still concerned about the housing market in Sydney and Melbourne. They were also concerned about the current issues on trade, the rising crude oil price, the slow rate of wage growth and the ballooning household debt. Officials expect the inflation rate this year to be at 2.0%. The latest CPI data showed the CPI at 1.9%. Tomorrow, the Australian Bureau of Statistics (ABS) will release the second reading of Q1 GDP numbers. The AUD/USD pair is now trading at 0.7620.
The British pound rose today after positive Services PMI data. Data from The Chartered Institute of Purchasing and Supplies (CIPS) showed that activities in the services sector jumped to 54.0. This PMI was higher than the expected 52.9. It was the highest number since March this year. In addition to the positive services sector, the British PM delayed the white paper on her Brexit plan. The plan was supposed to give businesses and people clarity on her plans about the transition. At the same time, she continued to face political pressure from Jeremy Corbyn – the labor leader – who called her weak when negotiating with Donald Trump.
The EUR/USD pair was little moved today after mixed PMI numbers from the European Union. The numbers from Markit showed that the services PMI numbers in the EU dropped to 53.8 in May from 53.9 in April. The PMI composite number for the region was unchanged at 54.1. To get the composite number, Markit surveys 300 executives in the private manufacturing sector and another 300 executives in the private services sector. The number was a continuation of the decline that started in February when the PMI was at 58.8.
The EUR/USD pair is currently trading at 1.1678, which is lower than yesterday’s highest level of 1.1745. The pair has crossed an important support as traders wait for the ISM manufacturing data from the US. It is currently trading below the one and two- month moving average, with the MACD and RSI trading at a narrow range. If the pair continues moving lower, traders should focus on the 1.1615 level.
The cable is currently trading at 1.3355, which is higher than today’s low of 1.3295. The pair jumped after the Services PMI data jumped, causing the pair to continue the upward trend started a week ago. It is currently trading above the short (30) and longer-term (60) simple moving average. The pair’s CCI indicator has fallen from the multi-month high of 311 and is currently trading below the overbought line. The same is happening with the RSI as shown below. This means that a correction, albeit short term, could be possible.
The AUD/USD pair dropped today after the statement by the RBA. The pair ended a major rally that started yesterday with the release of the retail sales. It is now trading at 0.7610 after crossing the 30-day SMA and is approaching the 60-day SMA. The pair started to decline after the RSI and Stochastics traded above the overbought level. Traders should now focus on the 1.7600 level as they wait for tomorrow’s GDP numbers.