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AUD in focus ahead of RBA meeting

Four markets in focus today: AUD/USD, Japan 225 Cash, GBP/USD and Spot Gold.

Australian notes
Source: Bloomberg

AUD/USD

It could be a busy day for the AUD with the official China manufacturing print at 11am AEST, while the RBA statement is released at 2.30pm. There will be some traders positioned for slightly dovish language from the RBA given the narrative in the recent minutes, but I would caution against that view and feel the statement will be little changed. Domestic data won’t be of concern to the RBA, in fact we have seen a number of data points improve since the last meeting, while China is arguably in a better spot. Resistance is seen at 0.9461 to 0.9466 (both the April high and top Bollinger band), while the 20-day moving average has been the area where traders have been happy to buy.

Japan 225 cash (Nikkei)

Having traded down to 15024 last week, the Japan 225 has since rebounded a touch and will be in focus today with the quarterly TANKAN report due at 09:50 AEST. The survey measures a range of businesses and will focus on capital expenditures and also how businesses see future trading, inflation and the break-even level the JPY required for their business. This makes this survey extremely important for the BoJ and therefore any traders of Japanese assets.

GBP/USD

Cable printed a higher high overnight and continues to trend nicely. Month-end buying and good mortgage data has been reported behind the move, with EUR also going along for the ride. The pair could target 1.7334 (the 50% retracement of the 36% sell-off seen between 2007 to 2009) over the longer-term and is currently at the highest level since 2008.

Spot Gold

Gold had a nice break out of the recent consolidation it’s seen since June 20 and is looking to close above the April 14 high and 61.8% retracement of the year’s high to low at $1331 and $1332 respectively. Momentum favours further upside, and as things stand the metal is poised to close above the weekly downtrend drawn from the October 2012 high. The weekly chart looks quite constructive for the bulls.

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