The Australian dollar jumped strongly today as the Reserve Bank of Australia (RBA) rate cut that some had expected did not eventuate.Instead the RBA left rates unchanged at 2.0%. But the real interest was not around the rate cut at all, in fact it was over the RBA statement following the announcement which led markets to believe that the RBA may indeed be actually slightly more hawkish than previously thought. It is a little surprising given the continued drop in commodities and the apparent lack of demand from China. What was more surprising was the fact that the RBA considers the fact that inflation may be better than expected and give the RBA room to move in the event it wishes to cut rates any further to support the economy.
Obviously, with all this interest the AUDUSD jumped up strongly on the charts, before finding it had no wings and falling back to earth after it touched the inside of the current bearish channel in play on the D1. The jump was certainly an overextension in my eyes at present as right now the price is looking like it will close just under resistance at 0.7190 on the chart. Going forward it's likely that AUDUSD traders will be watching this jump with a lot of care and I anticipate we may see the bearish trend continue in the short to medium term down to 0.7112 and even possible back into the 0.60-0.70 range that we had touched into recently.
Gold was also a big mover today, and even I was slightly surprised by the sharp selling in gold markets. I had previously mentioned yesterday that gold was looking bearish in the current market climate, but traders took the bull by the horns today and cast it aside as they looked to punish the bulls once and for all. On the H1 we have seen a drop below the bearish trend line which is painting a grim picture for anyone looking to buy, and despite a brief pullback up, we are unlikely to see anymore bulls come into the market unless it can break above. On the D1 chart it's quite clear to see that the next level for now is at 1104 and beyond that we are talking 1082, which has been tested extensively previously.
One thing that should be mentioned about gold trading is that is has repeat patterns which can be seen on the weekly chart, and market participants may be looking to see a repeat of previously where we saw a hard floor (strong support) form and dominate for a period of time. If that is the case then 1082 could be that lie in the sand for the time being.
Lastly, it was more positive data out for the S&P 500 today and I am looking to watch this one closely at the heavy resistance level at 2103 at present. Certainly this high up we could see some profit taking in the markets and today's rejection at that level after a brief push through shows there is still some market weakness and we may very well find it tomorrow with the raft of US data due to come out.
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