Flat in US Trade- Weekly/Monthly Opening Ranges, RBA in Focus
GBPUSD- The scalp levels highlighted in last week's report have continued to play out well with our bias remaining weighted to the topside since the China open last night. However as noted in the report, "Topside advances above the 1.6040 threshold should be approached with caution after multiple failed attempts with resistance seen just higher in the region between the monthly pivot, the 78.6% retracement at 1.6085-1.61 (channel resistance)." The high of the day as of 10:30am ET is 1.6085 and as such we remain on the sidelines here after the opening range of US trade offered little conviction on an intra-day bias.
AUDUSD- Price action at the open of US trade suggests a bearish intra-day bias for the session with the aussie trading heavy since the Futures open. Medium-term focus remains the 100-day moving average at 1.0393 with a break below exposing our objective at 1.0335 (38.2% Retracement). The RBA interest rate decision is on tap tonight and traders should limit exposure as we head into the print. Credit Suisse overnight swaps are factoring in a 92% chance of a 25bps cut with twelve month expectations calling for an additional 71bps in additional cuts. With expectations so heavily weighted on the side of a cut tonight, risk now becomes weighted to the upside if the RBA fails to deliver. Use caution on the short-side if they do cut as some profit taking may trigger a near-term rally with the accompanying statement likely to offer further clarity on future monetary policy from the central bank.
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---Written by Michael Boutros, Currency Strategist with DailyFX
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