The Australian dollar has been on a five day winning streak ahead of the Reserve Bank of Australia (RBA) meeting today where markets are expecting that rates will be put on hold ahead of the recent global uncertainty which have caused central banks to take pause. At the same time there has been a hung parliament situation looming in Australia as the election is looking to close to call and no one is looking to gain a clear majority in the lower house. On top of this, recent building approvals came in at -5.2% (-3.5% exp) which shows that many are worrying back in Australia about the current situation economically and fiscally.
On the charts the AUDUSD has been pushing up the charts recently and it's looking very bullish in nature. Markets will obviously be looking to see the direction though from RBA in the lead up to this, however any push higher will be approaching the 61.8 fib level and the market is generally quite bearish around this level. At the same time the 50 day moving average is likely to support any drops lower, and support at 0.7346 is likely to also hold back any major drops down the charts at this stage.
The pound continues to lack any form of direction on the charts after the Brexit continues to weigh and politics in the UK continues to be a mess beyond reason at times. Construction PMI data which came in recently was lower than expected at 46.0 and the services PMI (which dominates 60% of the work-force) is likely to take a hit as well as the market begins to look a little fragile in the wake of all the recent events. Across the UK uncertainty is an issue and a recent look at a key property fund has also taken a hit as investors look to exit in the wake of all this uncertainty - the market jitters we have seen are far from over and investors are gearing up for this.
The GBPUSD has so far been trapped within a band with resistance at 1.3340 and support at 1.3250. These levels are looking more and more likely to stay the same as the market continues to look for news to play off as the impending political drama continues to weigh on the currency markets. From here on in when the conservative party comes together it will likely lead to a boost in the pound and traders will be looking at resistance levels at 1.3484 accordingly. I still believe that we will see strengthening in the pound as the market will cling to any news that a Brexit is off the cards. But for now it certainly is a wait and see game.
Lastly, NZ business confidence has lifted to 19% which is a positive sign for the NZ economy. It will however be interesting how the RBNZ treats this as it has been treading very carefully and some are even thinking we may see a rate cut from the RBNZ if the Brexit problems spill over into global markets.
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