ASIC and FCA licensed Retail FX broker AETOS Capital Group have provided their daily commentary on traditional markets for May 8, 2019.
The Aussie surged against USD after the Reserve Bank of Australia’s latest interest rate decision yesterday. RBA left the interest rate at 1.5% on hold but lowered the expectation of CPI and GDP over the next two years.
The market expectation prior to the interest decision was RBA will cut the rate by 25 basis points on Tuesday, however, the RBA refused to be the first developed country’s central bank to start an expansionary monetary policy. The actual decision went the other way to the expectation, which drives the Aussie to surge. Although the RBA maintained the interest rate unchanged in May, the market still sees two rate cuts coming in 2019.
As China and US are in another round of trade talk, the upcoming Chinese trade balance is taking the centre stage on Wednesday. Moreover, the RBNZ is releasing the latest interest rate decision on Wednesday, which will have some impact on Aussie as well.
AUD/USD Daily Chart
AUDUSD rose back up to 0.7000 level and reached as high as 0.7047. However, Aussie pared gains after the rate decision, the price is 20 pips above the 0.7000 level. Aussie is currently supported by the 23.6% retracement level starting from January 2018, if the price can maintain the upward trend, the price will correct back towards the 20 days MA, which is 0.7061.
However, the candlestick for Tuesday has a very long upward shadow line, as big as three times of the candle, which indicates a potential short-term slump. The current support level is 0.7000.
Euro fell slightly against the USD after a 50 pips volatility on Tuesday, partly due to risk-aversion related to the US-China trade concern. And partly as a result of the EU Commission report, which lowered its outlook for growth this year to 1.2% from 1.3% previously. For 2020, the expectation of growth lowered to 1.5% from 1.6%, while inflation forecasts were left unchanged at 1.4%.
In the European session, the weaker German and French data accelerated the downtrend of Euro after the EU Commission report. The German factory orders was reported as 0.6%, higher than previous but still under the expectation, while the construction PMI didn’t meet the consensus as well. The balance of trade for France is reported as negative 5.3 billion Euros, lower than expected negative 4.1 billion. It deepens the concern while the US is putting more pressure on tariffs for EU products.
EUR/USD Daily Chart
The Euro rose up to 20 days MA at 1.1205 then retreated to 1.1188 which is supported by the 61.8% retracement level starting from January 2017. The Euro was traded within a downward channel since 10th of January, the 3 days MA is closing the 20 days MA. If Euro goes up to 20 days MA, the price will test the upper channel at 1.1250.
Considering, the Euro is generally weaker, and US dollar index has approached to the lower end of uptrend channel, Euro may not be able to break 20 days MA and will fall back towards the previous low at 1.1110.
Major Economic Events happening this week (AEDT Time Zone)
|Economic Event (Date)||Previous||Forecasted||Actual|
|AU – Balance of Trade (7 May)||A$4.801B||A$4.25B||A$4.949B|
|AU – RBA Interest Rate Decision (7 May)||1.5%||1.5%||1.5%|
|CA – Ivey PMI (8 May)||54.3||51.1||55.9|
|CN – Balance of Trade (8 May)||$32.67||$35||–|
|CN – Exports YY (8 May)||14.2%||2.3%||–|
|CN – Imports YY (8 May)||-7.6%||-3.6%||–|
|CN – Inflation Rate YY (9 May)||2.3%||2.5%||–|
|CA – Balance of Trade (9 May)||C$-2.9B||C$-2.3B||–|
|US – Balance of Trade (9 May)||$-49.4B||$-51.4B||–|
|DE – Balance of Trade (10 May)||€17.9B||–|
|GB – Balance of Trade (10 May)||£-4.86B||–|
|US – Core Inflation Rate YY (10 May)||2%||2.1%||–|
|US – Inflation Rate YY (10 May)||1.9%||2.1%||–|
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