RBA signals a rate cut as fresh woes surface in Europe
City Index July 3, 2013 1:59 PM
<p>The FX markets are seeing broad based dollar strength this morning, with the dollar index trading through the key resistance of 83.50. The euro traded […]</p>
The FX markets are seeing broad based dollar strength this morning, with the dollar index trading through the key resistance of 83.50. The euro traded through the 1.2990 level late in the US session on Tuesday following the resignations of both the Portuguese finance and economic ministers this week. This has put pressure on the bond market and follows the IMF warning on the next Greek bailout payment.
AUD continues to trade under pressure, trading through the 0.9100 level as RBA Governor Stevens said the board ‘had deliberated for a very long time’ at their meeting on Tuesday which has sent a signal to the market that a rate cut before the Australian election is now very possible. He also added that ‘if the economy needs a lower AUD then it will probably get it’.
The dollar got its final boost from voting member Powell who said that he is seeing a US economic recovery that is reaching a point where it becomes self-reinforcing, adding that the Fed will clearly state its intentions of when the easy money will stop. He added that the US economy may not quite be ready for the central bank to tighten.
This morning we get service PMI data from Europe and the UK along with retail sales data from Europe. This afternoon’s session brings us a warm up to Friday’s non-farm payrolls, with the ADP report and US initial jobless claims being released a day early due to the US holiday tomorrow. The ISM non-manufacturing survey is also being released at 3pm London time.
Supports 1.2955-1.2910-1.2885 | Resistance 1.3000-1.3080-1.3100
Supports 100.40-100.00-99.80 | Resistance 100.90-101.30-101.70
Supports 1.5125-1.5085-1.5000 | Resistance 1.5190-1.5230-1.5265
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