May 3rd 2016: Aussie Slumps on Rate Cut

• This morning, the Australian dollar is under severe pressure after cutting rates by 0.25% to 1.75%. In a double blow, Chinese Caixin manufacturing PMI came in below expectations, indicating even slower growth ahead. The AUD/JPY is down 1.75%, with the AUD/USD off by 1.22%.
• The move is triggering further ‘risk-off’ trading across markets with the USD/JPY down by 0.57%, with other yen pairs following suit.

• Dollar pairs are generally performing better, with the GBP/USD and EUR/USD rallying this morning.

• Coming up today, we have UK Manufacturing PMI at 09.30.
• This is followed by the annual Australian budget release at 10.30.

Trade Idea: 

• May has historically been a strong period for risk markets and this could mean a further upside for the GBP/USD.

• A good way to play this is a HIGHER trade predicting that the GBP/USD will close above 1.48 in 21 days for a potential return of 121%

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