EURO AND EUROPEAN STOCKS RISE AS GERMAN EXPORTS SLIDE
The Swiss franc moved sideways as investors reacted to the latest Swiss consumer inflation data. According to the country’s statistics agency, the headline Consumer Price Index (CPI) declined from 0.7% in May to 0.5% in June. The median estimate among analysts polled by Reuters was a 0.3% increase. Inflation rose from 2.9% to 3.4% on a year-on-year basis, which was higher than the expected 3.2%. Therefore, with inflation being at elevated levels, analysts expect that the Swiss National Bank (SNB) will deliver another rate hike this month. In its last rate decision, the bank warned that it could make an unscheduled market intervention.
The euro rose slightly against the US dollar after the relatively mixed economic data from Europe. In Germany, data by the country’s statistics agency showed that the country’s trade situation has worsened recently. Its exports declined slightly in May, pushing the country to its first monthly deficit in almost three decades. There are concerns about whether German companies will be able to maintain their competitive edge as energy costs soar. Another report revealed that investor confidence in Europe dropped to -26.4 in July. Therefore, the European Central Bank will find it difficult to hike interest rates in this macro environment.
The Australian dollar rose on Monday after the relatively strong economic data from the country. The statistics agency said that building approvals rose by 9.9% in May after crashing by 3.9% in the previous month. Further data showed that home loans rebounded by 2.1% in May even as private house approvals dropped. The labor market is also doing well as job advertisements rose by 1.4%. These numbers came as the Reserve Bank of Australia (RBA) started its two-day monetary policy meeting. The bank is expected to hike interest rates by another 0.50%.
AUDUSD
The AUDUSD pair rose sharply as investors waited for the upcoming interest rate decision by the RBA. It rose to a high of 0.6882, which was the highest point since Thursday last week. The pair has moved above the important resistance level at 0.6847, which was the lowest point on June 14. It has also risen above the 25-day moving average while the Relative Strength Index (RSI) has moved above the neutral point at 50. Therefore, the pair will likely keep rising as bulls target the key resistance at 0.6900.
EURUSD
The EURUSD pair tilted upwards on Monday after the relatively mixed economic data from Europe. The pair rose to a high of 1.0445, which was the highest point since Friday. It managed to move above the middle line of the Bollinger Bands while the William % Range is approaching the overbought level. The Relative Vigor Index (RVI) is also pointing upwards. Therefore, the pair will likely continue rising as bulls target the key support at 1.0500.
USDCAD
The USDCAD pair dropped to a low of 1.2843, which was the lowest point since June 29. On the four-hour chart, the pair moved below the important resistance point at 1.2887. It also dropped below the 25-day moving average while the Stochastic Oscillator and the Relative Strength Index (RSI) have pointed lower. Therefore, the pair will likely continue falling during the American session.
