Forex News and Events

RBA leaves room for rate cut

The publication of the RBA’s minutes from the May meeting shows that the Bank left the door wide open to further monetary policy easing move. The minutes contrast with the less dovish statement accompanying the rate cut. At that time, the rate cut had only a temporary effect on the Aussie as it was broadly expected and therefore already priced in by traders. In addition, the lack of clarity from the RBA is confirmed by the minutes as it shows that the members clearly retained an easing bias while markets participants expected no further rate cut, interpreting the move to refrain from providing guidance as a sign that the cash rate reached a bottom. “Members agreed that, the statement communicating the decision would not contain any guidance on the future path of monetary policy”, the minutes said.

On the housing market front, the minutes revealed that the rate cut could feed imbalances in the housing market. However, the members noted that housing price growth was strong in Sydney and Melbourne but subdued or even negative in the rest of the country. The RBA declared “The Bank would continue to work with other regulators to assess and contain the risks arising from the housing market”. The recent disappointing data from China will definitely not help improving the Australian economic conditions. As a reminder, China’ industrial production for April came in below expectation at 6.2%y/y (6.3% exp, 6.4% prior) while data on Monday indicates that China’s house prices decline further. AUD/USD moved lower since April 14 and we expect the Aussie to depreciate further in the medium-term as the RBA’s easing bias, together with the upcoming rebound in the US economy will weigh on the pair.

US Housing Starts (by Yann Quelenn)

April US Housing Starts report will be released this afternoon. Yesterday, NAHB homebuilder’s sentiment came in below expectation at 54 versus 57 consensus but still above 50, showing confidence in the housing market. New residential construction projects’ expectations are at 1015K compared to 926K prior read. Building permits’ expectations are at 1064k versus 1042K in March. Current number of housing starts is well below building permits reflecting the recent weakness of the US economy. Good data will help supporting the acceleration of the US economy and allow the dollar to strengthen further.

The latest economic data, including retail sales, industrial production or consumer confidence printed lower than expected. Rates are pressured downwards. We anticipate rate hike will be postponed even after September, or even set aside for a while. EUR/USD price action is driven by Greece’s uncertainties. The pair has just broken the resistance standing at 1.1220 (61.8 Fibonacci 1-month- retracement) after Benoit Coeuré’s from the ECB declared that the central bank intends to accelerate QE before summer. Good US Housing Starts will push the pair below 1.1220 and opening the road toward 1.1100.

EURUSD - Bouncing back

EURUSD

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD resumes upside toward 1.3300 ahead of BoE rate call

GBP/USD resumes upside toward 1.3300 ahead of BoE rate call

The GBP/USD gains traction and approaches 1.3300 in European trading on Thursday, having found buyers near 1.3150. A broad US Dollar pullback and a rebound in risk sentiment offer support to the pair ahead of the BoE policy announcements. 

GBP/USD News
EUR/USD rises further toward 1.1200, focus shifts to ECB-speak

EUR/USD rises further toward 1.1200, focus shifts to ECB-speak

EUR/USD stays strongly bid toward 1.1200 in the European session on Thursday. The pair capitalizes on a renewed US Dollar retreat and an upbeat mood. Traders digest the Fed's dovish outlook, bracing for ECB-speak for fresh trading incentives. US data are also eyed. 

EUR/USD News
Gold hovers close to new high of $2,600 after Fed meeting

Gold hovers close to new high of $2,600 after Fed meeting

Gold (XAU/USD) edges higher and trades back in the $2,580s on Thursday after falling to the $2,540s following the US Federal Reserve (Fed) decision on interest rates the prior day.

Gold News
BoE expected to keep interest rate unchanged at 5% as price pressures persist

BoE expected to keep interest rate unchanged at 5% as price pressures persist

After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.

Read more
Solana announces details of Seeker, second mobile device after Saga phone

Solana announces details of Seeker, second mobile device after Saga phone

Solana Lab’s second phone, Seeker, is set to launch in 2025. At Token2049, a global conference for crypto, Solana’s General Manager Emmett Hollyer said that the new mobile would be a “rewards magnet” for its users.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures