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Tuesday, July 4th
The AUD/USD pair showed volatile moves this morning, refreshing its weekly lows at 0.7604, after RBA announced its decision to hold monetary policy steady. Today the RBA left its interest rate unchanged, however, failing to provide any hawkish hints regarding its further monetary policy. Investors reacted aggressively on the neutral stance of the RBA, as markets expected more hawkish comments from Bank’s members, especially after talks of the RBA board member J.Edwards on the ECB Symposium last week, where he hinted on a possible tightening of the monetary policy in upcoming years. On the other hand, positive Australian Retail Sales data, released in mid-Asia, will be able provide some support to AUD bulls in the day ahead. Today we will have absolutely empty data calendar, as the US market will remain closed due to the Independence Day holiday, so broad market trend will remain as an exclusive driver for the pair during this trading session.
The EUR/USD pair was unable to keep its overnight recovery mode, having refreshed its weekly lows at 1.1336, following broad market trend. Increased expectations of more aggressive Fed monetary policy tightening strategy, backed by yesterday’s strong data from the US manufacturing sector, have accelerated greenback’s recovery across the market, thereby limiting any chances of the pair to regain its positions. Looking ahead, today the pair will continue to follow the US price-actions amid holiday-thinned light trading, as nothing important is scheduled in data calendar for the major this Tuesday.
The GBP/USD pair is trading with a slight bullish bias in the European opening, stepping away from its weekly lows, marked this morning at 1.2923 level. However, the pair remains unable to recover its major losses, backed by awful UK Manufacturing PMI, which was released this Monday. Meanwhile, higher expectations of another Fed rate hike this year, underpinned by green numbers of the US ISM Manufacturing report, are limiting pair’s further recovery. Adding to this, prevalent risk-off moods are also driving flows away from higher-yielding assets, such as the pound. Now all focus shifts towards the UK construction sector activity report, which will be released in European trading hours, while the US docket won’t bring any trading opportunities during this Tuesday, as the US market will remain closed due to Independence Day celebration, leaving the pair at the mercy of global market sentiments throughout the NA session.
The dollar/yen pair is trimming yesterday’s gains, as risk-aversion moods have improved somewhat in Asia. The pair came under fresh wave of offers in the Asian trading session, triggered by latest headlines of another launch of ballistic missiles by North Korea, stepping away from its multi-week highs, posted yesterday at 113.47 level. However, further downside rally may appear limited, as yesterday’s strong US manufacturing PMI report reignited expectations of Fed’s hawkish policy tightening, thereby supporting US dollar’s recovery across the market. Today nothing relevant is scheduled in data calendar for the pair, as the US market remains closed in observance of the Independence Day holiday.
The main events of the day:
US - Independence Day
UK Construction PMI – 11.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1309 R. 1.1453
USDJPY S. 111.55 R. 114.39
GBPUSD S. 1.2871 R. 1.3055
USDCHF S. 0.9545 R. 0.9687
AUDUSD S. 0.7616 R. 0.7718
NZDUSD S. 0.7231 R. 0.7377
USDCAD S. 1.2947 R. 1.3041
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