RBA’s surprise rate hike boosted AUD across the board today!
Will today’s Eurozone PMIs make or break EUR/AUD’s intraday downswing?
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/JPY hanging out near the top of a channel ahead of RBA’s policy decision. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Canada’s S&P manufacturing PMI improved from 48.6 to expansionary 50.2 as expected in April, but underlying data puts recovery on shaky ground.
U.S. S&P manufacturing PMI revised slightly lower from the initial 50.4 estimates to 50.2 in April after a 49.2 reading in March.U.S. ISM manufacturing PMI gains momentum, up from 46.3 to 47.1, but marked its sixth consecutive month of contraction in April.
Treasury Secretary Yellen says the U.S. risks defaulting as soon as June 1 without a debt ceiling increase.
POTUS Biden invited top congressional leaders for a May 9 meeting on the debt limit
British Retail Consortium: U.K. shop price inflation cooled from a record high of 8.9% to 8.8% in April as heavy discounting on clothing and furniture pulled the index lower.
Japan’s monetary base sinks further, down 1.7% y/y vs. -1.3% expected in April
RBA surprised markets with a 25bps rate hike to 3.85%, citing “too high” inflation that will take “a couple of years” before returning to the target range.
RBA noted that some further tightening “may be required” to return inflation to target “in a reasonable timeframe”
Germany’s retail sales were down by another 2.4% m/m in March vs. downwardly revised -0.3% in February, 0.4% expected
Nationwide: U.K.’s house prices rose by 0.5% m/m in April, the first increase in eight months. Annual growth improved from -3.1% to -2.7%.
Price Action News
AUD was trading inside its U.S. session ranges when the Reserve Bank of Australia (RBA) surprised markets with an interest rate hike.
Turned out, the RBA thought that a 7% inflation is still “too high” and that it would take YEARS for consumer prices to fall to the central bank’s target range at its current rate.
The surprise tightening bumped AUD by more than 1.0% higher than its major counterparts.
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone’s flash CPI at 9:00 am GMT
RBA Gov. Lowe is to give a speech at 11:20 am GMT
U.S. JOLTS job openings at 2:00 pm GMT
U.S. factory orders at 2:00 pm GMT
New Zealand’s quarterly employment numbers at 10:45 pm GMT
RBNZ Gov. Orr is to give a speech at 11:00 pm GMT
Australia’s retail sales at 1:30 am GMT (May 3)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
A surprise RBA rate hike earlier today boosted AUD across the board and dragged EUR/AUD to the 1.6380 level that’s near the S2 of the 15-minute Standard Pivot Points.
Here are EUR/AUD’s daily pivot points on MarketMilk™:full daily ATR move.
Not only that, but EUR/AUD’s current consolidation also lines up with a major resistance area in the first half of April.
Are we looking at an intraday pullback in the making?
A bounce from the 1.6400 psychological level could push EUR/AUD back to the S1 (1.6475) levels.
But if today’s Eurozone PMIs come in worse than expected, then EUR/AUD’s selling could gain another momentum, this time towards the S3 levels near 1.6300.