Headlines:

• RBA leaves the cash rate unchanged at 4.10%
• Full statement of the RBA monetary policy decision for July 2023
• Aussie pares losses after RBA setback earlier
• China major state-owned banks reportedly to have cut dollar deposits again
• ICYMI: China made a big change at the country’s central bank this week
• Germany May trade balance €14.4 billion vs €17.5 billion expected
• Some hope on the inflation front for the UK

Markets:

• NZD leads, EUR lags on the day
• European equities mixed; S&P 500 futures flat
• Gold up 0.3% to $1,927.98
• WTI crude up 1.6% to $70.91
• Bitcoin down 0.3% to $31,040

The 4th of July holiday in the US is putting a dampener on the market mood today. Major currencies didn’t do much in general, though we did see the aussie bounce around after the RBA decided to press the pause button and leave the cash rate unchanged.

AUD/USD fell initially from 0.6680 to 0.6645 before recovering to around 0.6690 now, up 0.3% on the day. Besides slight gains in the antipodeans, there wasn’t much else to take note of with dollar pairs keeping little changed mostly.

EUR/USD is hugging the 1.0900 handle, down 0.1% on the day. Meanwhile, USD/JPY is down just 0.2% to around 144.30-40 levels for the most part during the session.

There was a distinct lack of appetite and that is to do with US being out as a continuation from the weekend (there was an early market closure yesterday too).

Hopefully things will start to pick up tomorrow but do keep in mind that we have US non-farm payrolls on Friday and that could set markets into another lull before that.

This article was written by Justin Low at www.forexlive.com.

The US data has been
consistently surprising to the upside since the last FOMC meeting and given the
Fed’s message of two or more rate hikes coming this year if the economy
performed as expected, the market started to price in a more hawkish path for
interest rates.

The RBNZ, on the other
hand, went on pause at the last meeting and unless we see the data surprise to
the upside, especially the inflation numbers, the central bank should remain on
hold.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the price has
rebounded strongly from the 0.6050 level, and it now looks like the NZDUSD is
targeting the trendline at the
0.63 handle. The moving averages are
again about to crossover and we should see more upside more here, but a lot
will depend on the next NFP and CPI data.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the break of
the 0.61 support resulted
in a fakeout and the price rallied back strongly above the resistance and it’s
now breaking above the upper bound of the bullish flag pattern.
The breakout should lead to even more conviction for the buyers and a rally
into the 0.63 handle where we find the previous swing high resistance and the
major trendline. The sellers are likely to step in there with a defined risk
above the level and target the 0.5987 support.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is now diverging with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. We should see the first rejection from the 0.62 swing high
resistance where the sellers are likely to pile in targeting a break below the
trendline and new lows. The buyers instead should wait for the price to come
into the trendline to position for more upside. Alternatively, the buyers may
pile in as soon as the price breaks above the 0.62 handle with conviction.

Upcoming Events

It’s Independence Day today for the US, so
liquidity will be thinner. In the following days we will have some important data releases like
the US Jobless Claims and ISM Services PMI on Thursday and the main event of
the week: the US NFP report on Friday.

This article was written by FL Contributors at www.forexlive.com.

In terms of the size of the rate hikes, it’s still a surprising hawkish one all things considered. The remainder of the year is going to be more interesting but if anything else, it is likely to see major central banks grow less hawkish over time. Some food for thought:

• A catch up to central banks as we get into the second-half of the year

This article was written by Justin Low at www.forexlive.com.

This puts him in line as the next PBOC governor and is likely a directive for Yi Gang to step down from the post. Yi has been in charge of China’s central bank since 2018. As for Pan, he replaces Guo Shuqing as party secretary for the central bank with Guo now officially removed from his post as PBOC vice governor as well.

So, what does this tell us?

The reshuffle comes amid a time where the post-Covid recovery in China has pretty much come to a complete halt. It also comes as the yuan exchange rate is coming under pressure and also as Beijing are introducing a host of measures to try and tighten its grip on the financial sector.

According to Reuters sources, Pan’s appointment points to growing concerns within the country’s leadership over systemic risks in the financial sector. The way I see it, this is pretty much Beijing consolidating its power and policy direction as it looks to ensure a continuity of the ongoing monetary policy stance.

This article was written by Justin Low at www.forexlive.com.

The FOMC continues to
expect two or more rate hikes this year if the economic data remains strong as
Fed Chair Powell has also reiterated at the ECB forum last week. In fact, the
data has been consistently surprising to the upside since the last FOMC meeting
and that led to a more hawkish market’s pricing.

The RBA decided to keep its
cash rate unchanged today accompanied by the usual hawkish comments and the
promise of doing more if the data suggests so. They repeated their
determination of bringing the inflation rate to target and will do what is
necessary to achieve that.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that since the tap
into the 0.69 handle, AUDUSD sold off pretty heavily with almost no pullbacks
into the 0.66 handle where we got a bounce. The price is now probably pulling
back as the selloff overstretched. We should start to see sellers piling back
in shortly as the price is approaching resistances like the moving averages and previous
swing points.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the divergence with the
MACD was
already signalling a loss of bearish momentum and what follows is generally a
pullback or a reversal. In this case, the price broke out of the trendline,
consolidated a bit and now we are likely to see an extension to the 0.67 handle
where we can find the previous swing high level and the 38.2% Fibonacci retracement level of
the entire selloff since 0.69.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price found a strong support at the
0.6640 level and bounced from it after the downward spike after the RBA’s
decision. We should now see a rally towards the 0.6710 resistance. The sellers
are likely to step in there with a defined risk above the resistance zone and
target the 0.6563 support. Alternatively, if the price breaks the 0.6640
support without getting first to the 0.6710 resistance, the sellers should pile
in anyway and ride the bearish wave after the breakout. The buyers, on the
other hand, should pile in even more aggressively if the price breaks above the
0.6720 level.

Upcoming Events

Today the US is on
holiday for Independence Day, so the we see a choppy price action or nothing at
all as liquidity is thinner. Nonetheless, we’ll have some important economic
releases in the following days like the US Jobless Claims and the ISM Services
PMI on Thursday and the main event of the week: the US NFP on Friday.

This article was written by FL Contributors at www.forexlive.com.