- Australia Retail Trade: 0.7% vs. 0.4% forecast/previous
- Reserve Bank of Australia holds cash rate at 2.25%
Boom goes the Aussie, rocketing higher and faster than Mayweather-Pacquiao fight tickets after the Reserve Bank of Australia holds the cash rate unchanged at 2.25%. Based on what I can see from the official RBA statement, it seems that the RBA is still seeing weakness in business capital expenditure and export prices, with the latter likely on the recent fall in global energy prices.
On the positive side, lending to businesses (highest in six years at 5.6%) and housing prices have been on the upswing. Going into the event there was strong speculation that we would see a rate cut today, but with it being pushed back for another day, Aussie bulls jumped out of the woodwork to push Aussie pairs up big across the board:
AUD/USD is up 102 pips (+1.35%) to .7690, AUD/NZD is up 146 pips (+1.45%) to 1.0207, AUD/JPY is up 122 pips (+1.36%) to 91.96
The forex calendar for the upcoming London trading session will likely have forex traders turning their attention from the Aussie to a steady stream of potentially market moving economic data from Europe and the U.K.
The U.K. services PMI data, due at 9:30 am GMT, has the biggest potential for a pick up in volatility, with a forecasted reading of 57.0 vs. 56.7 previous, reflecting further expansion in the industry. This is a pretty big deal for the pound since the services sector contributes a huge chunk to overall U.K. economic growth.
Also lined up are services PMI readings from Europe, namely France and Germany, with both countries likely to show a pickup in their respective indices. The flow of European PMI data releases begin with France’s number around 8:50 am GMT.
And to close out the morning London economic calendar, the euro zone will print its producer price inflation data at 10:00 am GMT. The forecast is for a tick higher to around 0.1% vs. -0.9% previous, but another weak inflation read could quickly turn things around for the euro if the rest of the data does come out well throughout the morning.
Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.
In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis. Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!