RBA happy to sit on the fence as we await UK industrial and manufacturing production today

August 7, 2012 8:00 am by

EUR USD

EUR/USD

Range: 1.2374-1.2408
Support: 1.2300
Resistance: 1.2450

In fairly quiet markets the ECB’s conditional backdrop for the euro last Thursday continued to dictate market sentiment yesterday. Further helping this was the latest commentary from Germany yesterday which indicated that Merkel’s government is supportive of the ECB’s action and it was in no doubt that the central bank is acting within its mandate. Today we get Italian GDP data and German factory orders, with the later used by many to reflect the slowdown in the eurozone.

 

 

GBP USD

GBP/USD

Range: 1.5563 – 1.5608
Support: 1.5530
Resistance: 1.5700

The inflation report tomorrow will be the main catalyst for sterling as analysts widely expect the BoE to downgrade inflation expectations and growth, with most expecting further QE and a rate cut in the autumn. Today we see the release of manufacturing and industrial production data, with the Jubilee event looking to take the blame for a poor reading. The market is bearish so a slightly better data reading could see a short squeeze.

 

 

AUD USD
AUD/USD

Range: 1.0552-1.0603
Support: 1.0500
Resistance: 1.0650

Overnight the Reserve Bank of Australia (RBA) left the cash rate unchanged at 3.50%, in line with market expectations and market pricing. The accompanying RBA statement cited resilient domestic economic activity against a weak global backdrop, with seemingly little concern about currency strength. AUD/USD is broadly unchanged post-decision, trading at 1.0580 and the market is still pricing in one rate cut by early October.

RBA happy to sit on the fence as we await UK industrial and manufacturing production today
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