AUDUSD, Daily
The pair is trading in a triangular formation near a descending regression channel (drawn from July 30th high). There was a close below 0.7265 low but no downside momentum or follow through. This suggests that price that the September pivot high is likely to support prices over the coming days and market is likely to eventually push higher from its support. The sideways movement might therefore continue. Last week’s high and low are key levels to look at. The nearest resistance levels are at 0.7364 and 0.7382, two pivotal highs that coincide with the upper Bollinger Bands and a 100 period SMA. Price should move to these highs and could turn lower from there in which case the 0.7260 support should work as an initial target for shorts. If price breaks out of the sideways formation the Fibonacci extension levels at 0.7471 and 0.7640 could come into play. The latter one coincides with a historical resistance level and is therefore more significant as a resistance level. In case the last week’s low gets violated the weekly high at 0.7085 should work as a target level.
GBPAUD, Daily
The pair has rallied to a level that used support price in September. Yesterday’s high was almost at the level with 2.1355 resistance and today we’ve seen a move lower. At the time of writing price is reacting higher from a 4h pivot and a 50 period SMA but with a higher time frame resistance above this is likely to remain intraday noise for those looking for bigger moves based on the daily chart. If price corrects lower from the 2.1355 resistance the 50% and 61.8% Fibonacci levels provide a logical target area. These levels (2.1006 and 2.1047) coincide roughly with a 100 period moving average. The 4h chart points to 2.1302 – 2.1380 being an important resistance area while the 2.1006 – 2.1047 bracket coincides nicely with support area visible in the 4h chart. I’m looking for shorts between 2.1302 – 2.1380 with a view of taking profit between 2.1006 – 2.1047.
RBA minutes reveal a more upbeat view than expected
The central bank noted that “growth in output had continued at around the average pace of recent years” and that while global traded was “subdued” it had “picked up recently.” The board also noted that weakness in June-quarter growth had reflected “temporary, weather related disruptions to resource exports,” in addition to an ongoing decline in mining investment.
The RBA also noted “further evidence” that the economy is rebalancing from the resource sector toward non-mining activity, and was also fairly upbeat on the employment market. As for the risks, the board said that recent data “continue to raise concerns” about the outlooks for China and East Asia, which are Australia’s biggest markets for its resource exports. The swaps markets is pricing in odds of 58% for the RBA to cut interest rates in November, down from 65% ahead of the minutes (according to the FT). The Aussie dollar is also trading higher.