Sample Category Title

Pivot (invalidation): 0.9930

Our preference Long positions above 0.9930 with targets at 0.9965 & 0.9980 in extension.

Alternative scenario Below 0.9930 look for further downside with 0.9910 & 0.9895 as targets.

Comment The RSI advocates for further upside.

Pivot (invalidation): 110.65

Our preference Long positions above 110.65 with targets at 111.05 & 111.25 in extension.

Alternative scenario Below 110.65 look for further downside with 110.35 & 110.10 as targets.

Comment Even though a continuation of the consolidation cannot be ruled out, its extent should be limited. The pair is supported by a rising trend line while challenging a key threshold at 111.

Pivot (invalidation): 1.3145

Our preference Short positions below 1.3145 with targets at 1.3110 & 1.3090 in extension.

Alternative scenario Above 1.3145 look for further upside with 1.3180 & 1.3210 as targets.

Comment A break below 1.3110 would trigger a drop towards 1.3090.

RBA left the cash rate unchanged at 1.5% for a 21st meeting in July. The outcome had been widely anticipated. Indeed, the market has expected no interest rate adjustment at least until late 2019. As a result, market reaction outcome was rather muted.

On the global economic development, RBA acknowledged growth is “continuing” after noting it “strengthened” in the prior month. The members retained the view of solid Chinese economic growth. Yet, this month they pointed out the “uncertainty” driven by US trade policy. While reiterating “expansionary” financial conditions worldwide, the central bank acknowledged rate hikes in some economies.

Concerning the domestic market, RBA noted that short-term wholesale interest rates have increased over recent months. While attributing to US’ interest rate normalization, RBA for the first time admitted that “there are other factors at work as well”. The members, while not specifying the factors are, pledged to monitor the developments. On economic activities, RBA acknowledged the strong growth in 1Q18 but cautioned over the slowdown in household spending. It also warned of the sluggish growth in household income and elevated debt levels. Recall that GDP expanded +1.03% q/q in 1Q18, strongest since 3Q11. From a year ago, growth was +3.14%.However, consumption, usually taking up two-third of the GDP of an advanced economy, only grew +0.2%. This could be explained by seasonal factor but attention is warranted. Policymakers were also upbeat over the unemployment market, noting the low unemployment rate and the improving participation rate. They remained concerned over the slow wage growth but were confident that the rate has bottomed.

On exchange rate, RBA indicated that Aussie has “depreciated a little, but remains within the range that it has been in over the past two years”. This is compared with the June comment that “an appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast”. We believe this reflect that the members are content with the current level of Aussie.

The monetary policy stance was merely a repeat of the previous meetings, signaling that keeping the policy rate unchanged is consistent “with sustainable growth in the economy and achieving the inflation target over time”.

Pivot (invalidation): 1.1615

Our preference Long positions above 1.1615 with targets at 1.1655 & 1.1680 in extension.

Alternative scenario Below 1.1615 look for further downside with 1.1590 & 1.1570 as targets.

Comment Technically the RSI is above its neutrality area at 50.

Our pivot (invalidation) point stands at 6429.

Our preference As Long as 6429 is support look for 7107.

Alternative scenario The downside breakout of 6429 would call for 6177 and 6027.

Comment The RSI is above 70. It could mean either that the pair is in a lasting uptrend or just overbought and therefore bound to correct (look for bearish divergence in this case). The MACD is positive and below its signal line. The pair could retrace. Moreover, the pair is above its 20 and 50 MAs (respectively at 6623 and 6499).

XAUUSD (1239.59): Gold prices continued to ease lower as price action was seen falling below the 1242.25 handle. The close below this level could trigger further declines with a potential eventual test toward the 1200 mark. To the upside, gold prices will need to post a strong recovery above 1247 in order to confirm any signs of a recovery in the near term. The Stochastics oscillator continues to remain moving in the oversold level which could potentially trigger a short squeeze at the current levels. Resistance at 1263 remains the upside target in the near term.

USDJPY (110.84): The USDJPY currency pair broke past the resistance level of 110.62 quite comfortably. In the near term, any declines are likely to hold out at 110.62 which could now serve as support. The sharp parabolic gains however come at a risk of a downside breakout. A close below 110.62 could signal a move lower toward the support at 109.57 - 109.43 region.

EURUSD (1.1631): The EURUSD currency pair was seen giving up some of the gains made from Friday. However, price action looks to be subdued as the EURUSD was seen briefly testing the support level at 1.1610. As long as this price level holds, the EURUSD can be seen attempting to make another go to the upside. The resistance at 1.1730 remains a key level of interest and a breakout above this level could trigger further gains toward 1.1846 - 1.1824. To the downside, if the EURUSD falls below 1.1610, then we can expect the declines to stall near 1.1577.

The U.S. dollar was seen posting strong gains on the first trading day of the third quarter as the greenback rose 0.4% on the day. The gains coincided with the ISM's manufacturing PMI rising to 60.2 in June beating estimates which forecast a decline to 58.5. Construction spending was also higher at 0.4% during the month of May.

In the UK, the manufacturing PMI from Markit showed that activity in the sector rose to 54.4, beating estimates of 54.1 and rising from 54.3 in the previous month.

Data for the day will be dominated by the UK's construction PMI which, according to the median estimates is expected to rise modestly to 52.6. In May, construction activity was seen at 52.5.

The Eurozone retail sales data is due later with forecasts showing a 0.1% increase on the month. Canada's manufacturing PMI is also due this afternoon.

Data from the U.S. will see the release of the factory orders report which is expected to show a 0.1% increase after factory orders posted a decline 0.8% the month before.