RBA and GDP On Tap For AUD and ASX200
Matt Simpson September 2, 2019 3:30 AM
The expectations for RBA to cut tomorrow are quite low at just 11%. Therefore, traders will scrutinise the statement for any clues and no doubt short AUD if it appears more dovish than August’s statement. Overall, RBA appeared a little more upbeat on the domestic economy and placed greater emphasis on concerns over the trade war. Given tensions have once again risen and the Trump administration have rolled out a fresh round of Tariffs yesterday, we expect these concerns to at least be reiterated, or perhaps even intensified.
GDP data is out on Wednesday, which is another reason to expect RBA to hold off from easing tomorrow. We’ve seen a couple of bold calls for GDP to miss the mark and sink to 1.1% YoY from ANZ, with one analyst calling a -0.6% contraction for the quarter. Even PM Morrison is ‘expecting soft growth’ on Wednesday which, will likely be a greater market mover than tomorrow’s GDP meeting.
As for AUD/USD, we see potential for a technical bounce should tomorrow’s meeting be a non-event, or GDP surprises by not falling below 1.8%. The rationale here is that two prominent spikes to suggests demand is around 0.6677-0.6700 and, despite increased tensions over the trade war, she’s holding up. However, this is no reason to be bullish. Key resistance sits around 0.6832 and we’d see a rally towards this level as an opportunity for bears to fade into.
Take note that whilst realised volatility is quite low, 1-week implied volatility is just off a 3-week high to suggest a volatile move could be just around the corner. Given the established bearish trend we expect AUD/USD to break to new lows in due course, but the potential for a correction should not be ignored, given its reluctance to break lower these past two weeks.
The ASX200 is trying to breakout but has found resistance around the 38.2% Fibonacci retracement level whilst sentiment is under pressure from rump’s latest tariffs. Moreover, volatility has been lower today amid the 3-day weekend I the US, although the index may find the strength to break higher if the RBA meeting is dovish. Technically it looks like the low is in at 6,396, although we’d need to see a notable pickup with global sentiment for stocks to trade to new highs. For now, we think any gains are more likely to be part of a corrective rally and stall below 6,875 before bearish momentum returns.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.