AUSTRALIAN DOLLAR RISES AFTER UPBEAT RBA RATE DECISION

US stocks ended the day higher as investors remained optimistic about a new stimulus, positive economic data and Donald Trump’s health. The Dow Jones, S&P 500, and Nasdaq 100 rose by more than 1.70%. The president, who has been improving, left the hospital yesterday to continue treatment at the White House. The stocks also rose after relatively strong economic data from the United States. According to the Institute of Supply Management (ISM), the non-manufacturing PMI was 57.8 in September. The business activity index rose to 63.8 while new orders rose to 61.5. Also, the market is hoping that Congress and the White House will reach a new stimulus in the near term.

The Australian dollar was little changed against key peers as the market reacted to the country’s central bank decision. In its announcement, the bank left interest rates unchanged at 0.25%. The bank also said that it will continue supporting the economy as it continues in its recovery phase. It expects the rate of inflation will remain below 2% for the next few years. Also, it expects the economy to continue recovering in the final quarter of the year. Earlier on, data from the statistics office showed that exports declined by 4% in August, mostly because of the second-wave in Victoria and Melbourne. Imports rose by 2%.

Unlike yesterday, the economic calendar will be relatively light today. In the UK, Markit will release the construction PMI data. Analysts expect the numbers to show that the sector continued to expand as demand for houses rose. In Sweden, we will receive the country’s industrial production data while in Germany, we will get the August factory orders. In the United States and Canada, the commerce departments will release the August export and imports data. Finally, the Energy Information Administration (EIA) will release its short-term energy outlook.

EUR/USD

The EUR/USD pair rose to a high of 1.1790, which is just 10 pips below the important resistance at 1.1800. The pair also moved above the resistance at 1.1750, which was the neckline of the head and shoulders pattern. It is above the 50-day and 25-day exponential moving averages while the signal and main line of the MACD have continued rising. Therefore, by moving above 1.1750, it means that bulls have prevailed and will attempt to move above 1.1800.

GBP/USD

The GBP/USD pair rose to an intraday high of 1.2985. As the EUR/USD, this price is a few pips below the important resistance of 1.3000. On the four-hour chart, the price is above the ascending green trendline. It is also above the 25-day exponential moving averages while the RSI is still rising. Therefore, the pair is likely to continue rising as the pair attempts to cross the 1.3000 ‘barrier.’

AUD/USD

The AUD/USD was little changed as the market reacted to the RBA decision. It is trading at 0.7187, which is a few pips below the 50% Fibonacci retracement level at 0.7200. On the four-hour chart, the price is above the 25-day and 15-day exponential moving averages while the RSI has been rising. The pair also seems to be forming a rising triangle pattern. Therefore, there is a likelihood that it will break out higher in the near term.



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