Several major news releases impacted strong to the markets, as Australian central bank’s interest rate decision to AUD, Construction PMI to GBP and BoJ hawkish statement to JPY.
Here is the full market analysis on Forex and Commodity markets.
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This article is originally referred from FXGlobe Daily Analysis.
The Australian Dollar and the Great British Pound were the biggest movers of the day again following the Australian central bank’s interest rate decision. The Yen resumed its rally as well, after a shallow correction on Monday as traders are still focused on the Bank of Japan’s hawkish monetary statement. The Pound jumped higher unexpectedly after the better than expected Construction PMI, as the currency turned volatile before the BOE meeting on Thursday.
Precious metals jumped higher after a short correction, as we expected, and both gold and silver are re-testing the prior bull market highs currently. The metals were down by as much as 15% during the July pull-back, but now the long-term trend seems to be dominating the market again. Commodity currencies were also helped by the bounce of oil on Tuesday, with the bullish developments regarding the Australian Dollar also pushing the Kiwi and the Loonie higher.
USD/JPY (current price: 101.05)
The pair continued lower as expected as it broke below Friday’s low to trade below the 101.50 support for the first time since the end of June. The cross is now possibly headed to a re-test of the prior low at 98.50, with the lower boundary of the long-term declining channel also providing support slightly below that level. A strong resistance level lies ahead at 103.50, and the 200-day MA is still well above the current rate near 112 currently. The pair is now 600 pips lower since the release of the hawkish BOJ statement last week.
Our assessment: USD/JPY is still trading in a well-defined bearish trend channel after breaking out above it slightly two weeks ago, as the Yen might continue to be among the strongest currencies in the coming weeks.
EUR/GBP (current price: 0.8419)
The pair is still trading inside a short-term flag consolidation pattern, just above the crucial o.84 support/resistance level. The all-important Bank of England meeting is scheduled for tomorrow and volatility is likely to remain high until the release, as investors are still uncertain regarding the possible easing measures that the central bank could introduce. The better than expected British Construction PMI gave a huge lift to the Pound yesterday, pushing the cross lower, but the long-term trend remains bullish and the British economy still seems to be weaker than the rest of Europe.
Our assessment: EUR/GBP will probably stay in the short t-term formation until the BOE announcement, but a correction is possible following yesterday’s huge move.
AUD/USD (current price: 0.7590)
The Aussie has been in the center of attention in early trading, as investors were waiting for the RBA to cut its benchmark interest rate to 1.5%, a new record low. The central bank decided to cut the rate as expected, but the currency still rallied as the RBA didn’t follow up with another dovish statement. The pair is now back under 0.76 this morning, after drifting below the key level following the correction in global stock markets during the Wall Street session yesterday.
Our assessment: The cross is still stuck below the 0.7650 resistance, and it remains in a broad trading range, with strong support levels below the current rate at 0.75 and 0.7410 possibly being in the focus of traders currently as well.
WTI Crude Oil (current price: $39.95)
The crucial commodity rebounded after the sharp drop on Monday, but WTI is now trading back below the crucial $40 level after a late-day slump. The short-lived intraday rally in U.S. stocks helped oil yesterday, but the weakness in Asian and European markets might cause further problems for the struggling energy sector. The commodity is now below the flat 200-day MA and it’s right at the lower boundary of a declining short-term trend channel.
Our assessment: Oil is still under pressure as it fell on 13 out of the last 15 sessions, but a correction to re-test the 200-day MA is possible now, as the momentum indicators are showing oversold reading.
Wednesday promises to be a little less busy day concerning economic releases, but a few important indicators will still come out from Europe and the U.S. The Services PMIs will be published from the Eurozone and the U.K., as well as the Non-Manufacturing PMI from the U.S. The ADP Employment Report will give traders a hint about the official release that’s coming out on Friday. Crude Oil Inventories are also closely watched again, following the recent sharp decline in the commodity. The evening session will be highlighted by the announcement of the Australian Retail Sales growth.
Original Source: FXGlobe Daily Analysis