RBA rate hike?

The RBA during their monetary policy meeting during today’s Asian session, remained on hold as was widely expected. Interestingly RBA Governor Bullock allegedly stated that the bank is willing to raise interest rates should inflationary readings deviate from forecasted figures. Moreover, RBA Governor Bullock allegedly stated that a rate cut is not in the agenda in the near term, further enhancing the hawkish rhetoric that appears to have emerged from the bank. As such the bank’s hawkish rhetoric may aid the Aussie should it be maintained.Over in the US the ISM Non-Manufacturing PMI figure for July came in as expected at 51.4 and has thus escaped contraction territory. The confirmation that the non-manufacturing sector of the US economy has entered expansion territory, may have alleviated some concerns over the status of the US economy.San Francisco Fed President Daly stated yesterday that “it’s clear inflation is coming down closer to our target”, implying that the bank’s 2% inflation target is in sight and thus, the bank may be preparing to cut interest rates in the near-term, which in turn may aid the greenback. Overall, we would not be surprised to see the communication by Fed officials take a more dovish tone, in order to ease market concerns over the Fed’s monetary policy stance. As such, should further Fed policymakers imply that the bank’s dual mandate is coming better into focus and that they may cut rates in their next meeting, as is currently expected by market participants, it could weigh on the USD.In the US Equities markets, Google (#GOOG) lost an antitrust lawsuit brought by the DOJ which may weigh on their stock price.

XAU/USD appears to be moving in a sideways fashion. We maintain our sideways bias and supporting our case is the precious metal’s price action which failed to close below our S1 support level, despite piercing it.. However, we would also like to note that our upwards-moving trendline which was incepted on the 25 of June has been broken and the RSI indicator below our chart currently registers a figure near 40, implying bearish market tendencies. Nonetheless, for our sideways bias to continue, we would require the commodity to remain confined between the 2390 (S1) support level and the 2470 (R1) resistance line. On the flip side, we would immediately switch our sideways bias in favour of a bearish bias in the event of a clear break below the 2390 (S1) support level with the next possible target for the bears being the 2330 (S1) support base. Lastly, for a bullish outlook, we would require a clear break above the 2470 (R1) resistance level with the next possible target for the bulls being the 2520 (R2) resistance line.

WTICash appears to be moving in a downwards moving fashion. We continue to maintain our bearish outlook for the commodity and supporting our case is the RSI indicator below our chart which currently registers a figure near 30 implying a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 71.50 (S1) support line with the next possible target for the bears being the 64.10 (S2) support line. On the flip side for a bullish outlook, we would require a clear break above the 78.00 (R1) resistance line, with the next possible target for the bulls being the 83.45 (R2) resistance level. Lastly, for a sideways bias we would require the commodity to remain confined between the 71.50 (S1) support line and the 78.00 (R1) resistance level.

Other highlights for the day

Today in the European session, we get Germany’s industrial orders and manufacturing rates , followed by the Czech Republics Industrial output rate all for the month of June, the UK’s construction PMI figure for June and the Eurozone’s retail sales rate for June. During today’s American session, we get Canada’s trade data for June and the US weekly API crude oil inventories figure. During Tomorrow’s Asian session we get New Zealand’s unemployment rate and Australia’s manufacturing PMI figure for July.