RBA’s move favors Aussie

Aussie seems to pick up bid after the RBA interest rate decision and enjoying its bullish moment. Australia’s cash rate has been left on hold at the record low level of 0.10 per cent. The Reserve Bank of Australia met on Tuesday and decided to suspend official interest rates for eight consecutive months. The central bank cut the monetary rate to 0.10 percent in November in a bid to support the Australian economy’s recovery from the epidemic. RBA Governor Philip Lowe said on Tuesday that Australia’s economic recovery was stronger than expected and that growth was forecast to continue.

However, despite the strong recovery in the employment market, inflation and wage results are also included. “While inflation and wage growth are expected to increase, it will only be gradual and moderate,” Mr Lowe said. “The Board is committed to maintaining high supportive monetary conditions to support full employment and inflation targets in Australia,” Mr Lowe said. He also said the bank would continue to monitor the continued strength of the home market as prices rise in all major markets.  “Housing loan growth has increased and there is strong demand from homeowners-occupiers, including first-time home buyers,” he said.

“The board remains committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target,” Mr Lowe said. “It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. “To meet that, the labor market must be sufficient to generate materially higher wage growth than it currently has. Therefore, it is not possible to hike rates until at least 2024.

AUD/USD 4 Hour Chart:

Support: 0.7509 (S1), 0.7595 (S2), 0.7481 (S3).

Resistance: 0.7538 (R1), 0.7551 (R2), 0.7566 (R3).

Amidst this the RBA interest rate decision is playing a major role in Aussie dollar upward moment. We expect bullish trend for AUD/USD.

Europe inflationary recovery helps Euro

The appreciative move in the Europe made the EUR/USD bullish on Today market session. The pair recovered from the low which is made on Friday post-Nonfarm Payroll (NFP) data.  The US Dollar Index (DXY) follows the treasury yields and retreats from the monthly high. Mixed US economic data dropped the green back. NFP data came in at 850K, beating market expectations at 700K. The rate hike from the central bank revealed data expectations sooner than expected from the Fed. The unemployment rate rose slightly to 5.9%. U.S. factory orders rose 1.7% in May, slightly above market expectations.

Rising inflation in Europe will not be temporary, Dutch central bank chairman Klaas Knot said in an interview with NRC Handelsblad on Sunday. Knot who is known as one of the worst members of the European Central Bank’s board of directors, said “inflation is not dead.” “We should not overestimate the ability to determine what temporary inflation is and what is not,” he said.

The ECB has forecast 1.9% inflation this year as it is considered a temporary factor among the recovery after the corona virus infection. By 2022, the bank predicts that inflation will fall to 1.5%. Its long-term inflation target is near, but slightly below 2%. If this is achieved in the medium term, Knot said in the paper, “Let’s see if we can tighten the (monetary policy) straps as we have been able to untie them for the last 10 years.” The World Health Organization (WHO) has warned that there will be a third corona virus wave in Europe as cases increase after 10 weeks of decline.

The minutes of the June meeting are due to be released on Wednesday, which may shed some light on the policymaker’s insights into the economic and inflation outlook. U.S. dollar gains in anticipation of the Hawkish Fed view.  For now, traders are waiting to know the German Markit Index (PMI) data, Eurozone PMI data to gauge the market sentiment.

EUR/USD 4 Hour Chart:

Support: 1.1821 (S1), 1.1780 (S2), 1.1754 (S3).

Resistance: 1.1888 (R1), 1.1914 (R2), 1.1956 (R3).

Amidst this the Europe inflation recovery and U.S post NFP data keeps the pair is on positive move. We expect a bullish trend for EUR/USD.

BTC/USD Weekly Forecast (05th July 2021 – 09th July 2021)

Fundamental view:

Bitcoin price had a mixed trend against the dollar this week, but however it somewhat managed to set up a higher high, which signaled a bullish development. But the later half of the week has been unfavorable for BTC as BTC continues to decline in search of a foothold.

The world’s biggest interdealer broker TP ICAP announced plans to launch a crypto trading platform for institutional investors. The platform is under development with the help of Fidelity and Zodia Custody. This news favored the flagship cryptocurrency.

The institutional capital continues to flow into the cryptocurrency industry but China’s clampdown has forced miners to move to countries with friendlier regulations. This impacted the BTC negatively.

The major economic events deciding the movement of the pair in the next week are ISM Non-Manufacturing PMI at July 06, FOMC Minutes at July 07, Initial Jobless Claims, EIA Crude Oil Stocks Change at July 08 and Wholesale Inventories monthly report at July 09 for US.

BTC/USD Weekly outlook:

Technical View:

Last week’s high was 2.08% higher than the previous week. Maintaining high at 36541.6 and low at 32299.5 showed a movement of 4242 pips.

In the upcoming week we expect BTC/USD to show a bearish trend. The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 31665.0 may open a clean path towards 29861.2 and may take a way down to 27422.9. Should 35907.1 prove to be unreliable resistance, the BTCUSD may raise upwards 38345.4 and 40149.2 respectively. In H4 chart rounding top pattern favors prospects of a bearish trend. Bearish engulfing pattern constructs a Bearish outlook for the pair in the upcoming week.

Preference
Sell: 33391.5 target at 29862.2 and stop loss at 35912.6

 

Alternate Scenario
Buy: 35912.6 target at 40148.9 and stop loss at 33391.5

XAU/USD Weekly Forecast (05th July 2021 – 09th July 2021)

Fundamental view:

Gold showed a slightly bullish trend against the greenback in the past week. In the absence of high-tier macroeconomic data releases in the first half of the week, hawkish Fed commentary helped the greenback stay resilient against its major rivals. Whereas Federal Reserve’s Vice Chairman for Supervision Randal Quarles said that the Fed is very mindful that they could be wrong on inflation pressures being temporary.

On the other hand, favoring yellow metal, the Unemployment Rate edged higher to 5.9% while the Labor Force Participation Rate remained unchanged at 61.6%. The USD struggled to preserve its strength following the jobs report and helped XAU/USD to show an uptrend.              

The major economic events deciding the movement of the pair in the next week are ISM Non-Manufacturing PMI at July 06, FOMC Minutes at July 07, Initial Jobless Claims, EIA Crude Oil Stocks Change at July 08 and Wholesale Inventories monthly report at July 09 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.01% higher than the previous week. Maintaining high at 1795.0 and low at 1750.5 showed a movement of 445 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1804.6 may open a clean path towards 1822.0 and may take a way up to 1849.1. Should 1760.1 prove to be unreliable support, the XAUUSD may sink downwards 1733.1 and 1715.7 respectively. In H4 chart ascending scallop pattern formation favors prospects of a bullish trend. Also to be noted three outside up pattern formation exerts the expectation of uptrend for the pair.

Preference
Sell: 1785.2 target at 1821.7 and stop loss at 1755.4

 

Alternate Scenario
Buy: 1755.4 target at 1716.9 and stop loss at 1785.2