The board of RBA says in the February meeting minutes that a very significant monetary support is needed for some time, otherwise there would be significant upward pressure on the AUD. Even though the currency has been trending higher recently the bank concludes that it is noticeably lower than it would have been had there not been stimulus in November. The central bank said it will keep the cash rate at 0.10% as long as it is necessary to reach the 2% – 3% inflation target. The RBA believes there needs to be a sustained period of tightness in the labour market before wage growth and inflation can be expected. AUDUSD is trading near the 0.7803 resistance level. At the time of writing this the pair reacted a little lower from the level. There are no significant economic releases scheduled for the rest of the day. The risk events in tomorrow’s calendar include Canadian and UK inflation figures, US retail sales and the FOMC meeting minutes. See our economic calendar for more information. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

The release of the RBA meeting minutes helped the AUDUSD to rally to the 0.7803 resistance level but this move was rejected and the pair dropped back to the level it was trading before the release. This quick reaction suggests weakness for today’s trading. Over the last 8 trading days AUDUSD has declined on only one day. Now that it trades near resistance levels (0.7803 and 0.7820) the pair is vulnerable to profit taking. The next support zone can be found at 0.7700 – 0.7712 (20-day SMA and a low from Thursday last week). Then at 0.7640 – 0.7657 we have both 50-day SMA and the 50% Fibonacci retracement level. The support at 0.7563 is a highly significant swing point and we should pay close attention to price action around the level. A decisive penetration of the level would make it likely that the pair would trade to the 0.7476 support or at least nearby and a bounce from the level would indicate strength that could eventually take the pair beyond December highs. In fact, any higher low above 0.7476 that is followed with some upside momentum increases the likelihood of this taking place. Note also that rising trendline support can be found at 0.7598. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts. 

AUDCAD looks weaker than AUDUSD. The pair rallied to 0.9855 resistance two days ago but failed to penetrate the level. Now we have a down bar for yesterday in the daily chart which suggests that the bulls are not in control. Stochastics (5.3.3) indicates the same. The next support area at 0.9796 – 0.9803 (the 23.6% retracement level and the 20-day SMA) is a minor support compared to the support the zone formed by a swing low at 0.9714 and 38.2% retracement at 0.9728. There is also rising trendline support at 0.9762 that roughly coincides with the 50-day SMA at 0.9775. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.

Recent macroeconomic data releases

  • Canadian Employment Change -212.8K, -43.5K expected
  • Canadian Unemployment Rate 9.4%, 8.9% expected
  • US Average Hourly Earnings 0.2%, 0.3% expected
  • US Non-Farm Employment Change 49K, 85K expected
  • US Unemployment Rate 6.3%, 6.7% expected
  • Canadian Ivey PMI 48.4, 49.5 expected
  • New Zealand Inflation Expectations 1.89%, 1.59% expected
  • US CPI 0.3%, 0.3% expected
  • US Core CPI 0.0%, 0.2% expected
  • US Crude Oil Inventories -6.6M, -0.9M expected
  • US Unemployment Claims 793K, 755K expected
  • UK Preliminary GDP 1.0%, 0.5% expected

Important macroeconomic data releases today

  • Australian Monetary Policy Meeting Minutes

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst
TIOmarkets.com

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