Daily Market Insights



Aussie shifts to bullish

In Q2, the Australia's headline CPI inflation has subdued than expected (1.9%). The Annual underlying inflation has been recorded as the strongest reading since Q4 2015. The inflation figures remain below the target band. (1.8% Y-O-Y). The figures are expected to increase over H2 2017. The end of the mining investment decline and the higher commodity prices will support a moderate wage growth.

The RBA Governor's speech on "The Labour Market and Monetary Policy" has no much effect on the market. The Federal Reserve is planning to wind down the huge holdings of bonds soon as a sign of confidence in the U.S economy. Also, the Fed is keeping its interest rates unchanged.

According to the U.S central bank's rate-setting committee, the economy had been growing moderately and the job gains had been good. The policymakers have been worrying about the inflation and the underlying price gains which had declined. But this is expected to strengthen the economy.

The Fed is contemplating to kick off the process of reducing its $4.5 trillion balance sheet in September. But the final decision is not entirely in its hand. Yellen also confirmed the lawmakers that the Fed is focusing on the ways and is on track to increase the interest rates.

Intraday bias in AUD/USD is trading above 0.8002 level which gets good support base that reinforces the expectations of continuing the bullish bias in the upcoming period. The way is open to head towards the recently recorded top at 0.8094 on the near term basis. The pair remains bullish for the moment while trading on rebound after testing the barriers. That makes the trading settle now at the support area that appears in the chart. Some consolidations would be seen with bullish momentum and a further rise is expected from current levels. The rebound is found at the latest trend line support and the oscillator is above 80.0 levels. We can see the pair showing sign of a medium term bullish movement to upward bias. An upside breakout through 0.8094 is expected with 50EMA holding the area strongly now and 100SMA. Hence, we'd be expecting resumption of a larger up-trend from current resistance turned support levels.

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