The Australian dollar declined sharply after the RBA released dovish minutes. The bank said that it will consider further easing if economic growth continues to weaken. The bank also said that it was reasonable to expect that an extended period of low interest rates will be required in Australia. Officials said that this will help the country make progress towards full employment and reach the inflation target. They were optimistic about the housing market, which they said was starting to recover in Sydney and Melbourne. In the meeting, the central bank decided to leave interest rates unchanged.
The price of crude oil remained at elevated levels after the weekend attacks on the world’s biggest refinery in Saudi Arabia. The attacks knocked down more than 50% of Saudi Arabia’s oil supply. According to the Financial Times, Saudi officials have said that a return to normal could take months, which will mean higher fuel prices. Further, the likely retaliation by Saudi and its allies could mean that the region will be very volatile, which will lead to higher prices. Today, traders will continue to focus on this developing story as new details emerge.
Later today, the market will receive the economic forecasts from the State Secretariat for Economic Affairs (SECO) from Switzerland. This is a document that assesses the current state of the economy and projects what will likely happen. From Germany, ZEW will release the current and economic sentiment for September. The current conditions are expected to decline from -13.5 to -15 while the economic sentiment is expected to improve slightly from -44.1 to -38. Meanwhile, in the European Union, the ZEW economic sentiment is expected to improve slightly to -37.4 from -43.6. From the United States, the Fed will release the industrial production, manufacturing production, and capacity utilization rate for August.
EUR/USD
The EUR/USD pair stabilized in the Asian session after declining sharply yesterday. This is because traders are trying to position themselves ahead of the Fed statement tomorrow. The pair is now trading at 1.1010, which is slightly above the overnight low of 1.0992. On the hourly chart, this price is along the middle line of the Bollinger Bands while the RSI has moved up slightly from 20 to the current 40. With no major economic data expected from the US today, all eyes will be on the Fed, which could cause the pair to trade within a narrow range.
AUD/USD
The AUD/USD pair declined sharply after the RBA released dovish minutes of the previous meeting. The pair is trading at 0.6835, which was the lowest level since September 6. On the 30-minute chart below, this price is below the 14-day and 28-day moving averages. The RSI has slumped to the current low of 20 while the signal and main line of the Stochastic indicator has continued to remain below the oversold level. The pair will likely continue moving lower to test the important support of 0.6800.
XBR/USD
Yesterday, the price of crude oil jumped by more than 20% after the biggest oil refinery was attacked. This was the biggest intraday gain after Saddam Hussein attacked Kuwait in the 90s. The XBR/USD pair is trading at 67.23, which is slightly lower than yesterday’s high of 68.70. On the four-hour chart, this price is along the important resistance level as shown below. The price is slightly above the 14-day and 28-day moving averages while the RSI has remained slightly below 70. The pair will likely continue being volatile as traders wait for more information.
