FXStreet (Mumbai) – The Reserve Bank of Australia’s unchanged policy decision with cash rate left steady at record low of 2% today pushed the Aussie higher across the board, while NZD/USD also remained supported at 0.71, tracking gains from its OZ neighbor. While, USD/JPY faced rejection at 125 barrier and fell back in red near 124.70 levels on profit-taking.
Key headlines in Asia
RBA holds interest rates at 2%, retains dovish bias
USD/JPY hits 125.00 institutional target
Nikkei extends rally for 13th straight session, at 15-yr highs
Australia account deficit slightly better-than-expected in Q1
Dominating themes in Asia – centered on JPY, AUD, NZD
A relatively quiet Asian session, with the US dollar broadly muted, consolidating previous gains following impressive US ISM manufacturing PMI and construction spending data which supported the case for Fed rate-hike this September.
While the USD/JPY pair hit fresh 13-yr highs, finally breaching 125 mark – institutional target, only to wipe out gains and retreat to 124.70 levels. On the other side, Japanese stocks took a breather and halted its winning streak for the 13th straight session, retracing from 15-year highs peak.
AUD/USD extends its overnight gains and rallies to fresh session highs above 0.7680 levels in the late-Asian session, mainly driven by AUD strength after the Reserve Bank of Australia (RBA) kept cash rate unchanged at record low of 2%, while leaving doors open for further easing in the year ahead. The New Zealand dollar posed a solid comeback from fresh four year lows of 0.7065 reached on Monday and now trades back above 0.71 barrier largely on the back of profit-taking after the recent weakness.
Heading into Europe – centered on EUR, GBP
German employment data is expected to kick-start a data-heavy European session, with Euro zone CPI Flash estimate to follow through. From the UK, we have the key construction PMI report and net lending to individuals data. While ECB Governing Council member Ignazio Visco will speak in Trento, Italy.
Germany’s labor data for May, with the unemployment rate expected to remain at 6.4%, after the same rate recorded in April. The number of registered unemployed in Germany declined in April, with 8000 workers excluded from the official jobless count and the fresh number is expected to be even better at 10k.
The euro zone will publish its May inflation data estimate. In April, consumer price growth in the euro zone remained at a flat 0.0% level, m/m and 0.6%, y/y.
It is expected to add 0.2% in the fifth month of the year on a monthly, and 0.7% on an annual basis.
Meanwhile, the Greek saga – Greece’s ability to fulfill the first of four June payments to the IMF will remain in the center of attention as well.
EUR/USD Technicals
Valeria Bednarik, chief analyst at FXStreet explained, “EUR/USD extended its advance beyond the 1.0950 level, and the 1hour chart shows that the price aims to advance beyond its 20 SMA, whilst the technical indicators turned higher, but remain below their mid-lines.”
“In the 4 hours chart, the technical indicators are bouncing from their mid-lines whilst the price moves back and forth around a flat 20 SMA, presenting an overall neutral stance. Support levels: 1.0950 1.0900 1.0860. Resistance levels: 1.1000 1.1050 1.1090.”
(Market News Provided by FXstreet)