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The Australian dollar had a relatively quiet week and the limited movement has continued on Monday. There are no Australian releases today, so barring any surprises from today’s US durable goods release, I expect little movement from AUD/USD in today’s session.

The RBA holds its policy meeting next week and is widely expected to raise rates. In June, the RBA hiked by 0.50%, surprising the markets which had expected a smaller move. Even with the 0.50% salvo, the cash rate is currently only at 0.85%, meaning that the RBA will have to dramatically raise rates in order to curb spiralling inflation. In the first quarter, inflation rose to 5.1% and the RBA is predicting that inflation will rise to 6% before year’s end.

Lowe says 0.75% hike unlikely

Governor Lowe signalled on Friday that the RBA would not deliver a super-size 0.75% hike at next week’s meeting. Lowe said that such a move was “not on the table” and that the Bank was looking at “graduated steps” at the July meeting. This means that the July meeting is live, with the RBA most likely to deliver a rate hike of 0.25% or 0.50%. There has been speculation that the cash rate could hit 4% in 2022, although some quick math indicates that the RBA would have to implement at least one 075% hike to achieve that level.

Lowe also touched upon the quandary facing the RBA (and other central banks), that being how to curb inflation with high interest rates without causing an economic downturn. The notion of agressively raising rates and still being able to guide the economy to a ‘soft landing’ is a huge challenge, and Lowe acknowledged that the RBA had a “narrow path” to succeed.

AUD/USD Technical

• AUD/USD is testing support at 0.6936. Below, there is support at 0.6877
• There is resistance at 0.7004 and 0.7063

G7 countries are discussing refusing to import gold from Russia – another attempt to limit the country’s export earnings. However, this news is more about headlines than the potential to become an actual market mover.

The price of the troy ounce rose by $12 to $1838 on Monday’s open and changed a little since. The 0.6% increase shows that commodity buyers are not so concerned about commodity shortages.

The G7 countries and most major economies in the EU have not been buying Russian gold for many months, so the announced measures will have little effect on current demand but will only document the status quo.

As with oil, we may see a temporary and time-limited supply shock due to a change in logistics, but not a loss in the share of gold that Russia supplies to the world market. However, gold was already winning back this shock at the beginning of March.

Potentially, this is good news for mining companies outside of Russia, as the competitiveness of their products in developed markets will be further enhanced.

It is worth paying attention to how Newmont, Barrick Gold or ETF funds that include gold or silver producers will trade. If we do not see a rise in prices or a surge in volumes today, we should not expect this news to affect the market any further.

A glance at the gold chart from the tech analysis side is not bullish just yet, either. Gold is traded under the 200 SMA, and it has not been able to break out of this line for the last month and a half.

Meanwhile, the 50-day average is moving towards the 200-day, promising a death cross early next month. In the last two periods (February and August 2021), gold has lost about 7% after the occurrence of this bearish signal. It is well worth expecting that this time too, we only see a consolidation before another round of declines into the $1730 area before the end of September.

Bitcoin gained 3.8% over the past week, ending around $21.4K, dropping slightly to $21.2K on Monday morning. Ethereum added 9.4%, while other top-ten altcoins gained between 4.6% (Cardano) and 19.3% (Dogecoin). The total capitalisation of the crypto market, according to CoinMarketCap, rose 8% over the week to $952bn. The Bitcoin Dominance Index slipped 0.9 points to 43.4% over the same period due to the outperforming recovery of altcoins.

The cryptocurrency fear and greed index went up to 12 points by Monday, from 9 a week earlier, but remained in the extreme fear zone.

Bitcoin has risen above 20K in the past week, although its recovery has been more subdued than the stock market. This performance of the first cryptocurrency may indicate that investors continue to sell off the first cryptocurrency on the rise, moving into altcoins.

In the coming days or weeks, the important thing will be the performance of the crypto market capitalisation without BTC. Temporarily dipping below 2018 highs near $500B, the Crypto cap ex-BTC is showing a solid rebound, much more active than BTCUSD. However, it remains to be seen how sustainable this bounce will be.

CNBC broadcaster and author of the famous Mad Money programme, Jim Cramer, believes that bitcoin will be able to partially recoup its June losses in the coming months. However, aggressive long-term growth is unlikely. According to him, the rebound before another fall will provide good opportunities to sell previously bought assets.

Gary Gensler, head of the US Securities and Exchange Commission (SEC), is pushing for a single set of rules for cryptocurrencies that would bring together all regulators and strengthen industry regulation.

Cardano co-founder Charles Hoskinson told the US Congress that the SEC and CFTC would not be able to handle oversight of the cryptocurrency industry. In his view, it could self-regulate along the lines of the banking industry.

According to a Paxos survey of regular physical gold buyers, nearly one-third of respondents see bitcoin as a better alternative to that precious metal.

US durable goods orders rose 0.7% mom to USD 267.2B in May, above expectation of 0.1% mom. It's up seven of the last eight months. Ex-transport orders rose 0.7% mom, above expectation of 0.4% mom. Ex-defense orders rose 0.6% mom. Transportation orders up two consecutive months, led the rise by 0.8% mom.

Full release here.

China's PBoC made its biggest daily cash injection into the banking system in nearly three months today. CNY 100B worth of seven-day reverse repos were injected. The central bank said the operation was to keep " maintain stable liquidity levels at half-year end".

Separately, PBoC Governor Yi Gang said, "This year, we face some downward pressures of growth due to COVID-19 and external shocks, and the monetary policy will continue to be accommodative to support economic recovery in aggregate sense."

USD/CNH is staying in sideway trading below 6.8237 (May's top). Structure of the prices actions are clearly corrective, indicate that that rise from 6.3057 is now over. Strong support is likely to be seen around 55 day EMA (now at 6.6379) to contain any downside attempt. Break through 6.8372 is expected as a later stage.

Spot gold opened with a gap higher and edged higher on Monday, lifted by signals that some Western nations are planning to officially ban imports of gold from Russia, in extension to the package of sanctions already imposed.

The technical structure on daily chart remains weak that suggests limited and short-lived upside action, as strong negative signal was generated by a multiple failure at 200DMA resistance ($1844) and weekly close below this indicator.

In addition, the 14-d momentum stays in the negative territory and falling daily cloud continues to weigh on gold price that supports the notion.

Near-term action is expected to remain biased lower while holding below 200DMA, with violation of triangle support line ($1818) to risk test of $1805/00 zone (June 14 trough / psychological) and May 16 low at $1786.

Alternatively, sustained break above 200DMA would ease downside risk, however, much more work at the upside (lift above $1879, June 13 high) would be required to sideline larger bears.

Res: 1844; 1848; 1859; 1857.
Sup: 1828; 1818; 1805; 1800.

The Aussie Dollar started a fresh decline from the 0.7050 zone against the US Dollar. The AUD/USD pair tested the 0.6880 zone where the bulls took a stand.

The pair is now correcting losses and trading above the 0.6900 level on FXOpen. It is placed above the 0.6920 level and the 50 hourly simple moving average. There is also a connecting bullish trend line with support near 0.6915 on the hourly chart.

On the upside, the first key resistance is near the 0.6945 level. If there is an upside break above the 0.6945 level, the pair could rise steadily towards the 0.7000 level in the near term. Any more gains could send the pair towards 0.7050.

An immediate support on the downside is near the 0.6915 level. The next key support is near the 0.6900 level. A downside break below the 0.6900 support could lead the pair towards the 0.6870 support.

From Elliott wave perspective, an impulsive five-wave drop from the highs suggests temporary top and new, higher degree three-wave (A)-(B)-(C) corrective pullback called a zig-zag correction. Currently we can see it finishing wave (A), so after a corrective recovery in wave (B) be aware of further weakness within wave (C).

From a technical point of view, we will ideally see bounce and recovery here around 6.0 level and back to 8.0 resistance area, from where we can expect another sell-off down to projected strong 4.0 support zone.

The Dax 40 bounces back as falling commodity prices ease inflation fears. Sentiment remains downbeat after the index fell through May’s low at 13300. However, a break above 13400 may prompt sellers to lift their feet off the pedal. The bulls will need to push past 13650 before the relief rally could gain traction. Otherwise, most buyers may be wary of going in with both hands for fear of catching a falling knife. On the downside, a fall below 12900 would trigger a new round of liquidation to March’s bottom next to 12500.

Silver recoups some losses as the US dollar takes a breather. On the daily chart, the price has struggled to lift offers around the 30-day moving average, suggesting prevailing selling interest. A drop below 20.90 has invalidated the mid-June rally. As buyers seek to bail out, the path of least resistance could be down. May’s low at 20.50 is the last support and its breach could trigger a broader sell-off towards 19.00. On the upside, 21.50 is the closest resistance and the triple top (22.00) a major level before a recovery could happen.