Global macro overview for 08/08/2018

The holiday handle continues, and the macro calendar does not suggest that it should change quickly. A week after the US labor market report is always the slower period in the month, but if we take the amendment for the August slump, it is only worse. Episodes, when the EUR/USD loses or gains 30 pips, must be treated as a noise unrelated to any trend or new information. If there are trade wars at the top of the list of topics for discussion, good US data or encouraging comments from the Fed - investors have an excuse to buy USD. But if such a move does not find additional fuel in the next hours, the position is regrouped and reduced.

The highlight of the day was the decision of the Australian Reserve Bank, which is already behind us and practically passed unnoticed. RBA, in line with expectations, maintained the cash rate at 1.50%, and the announcement lacked surprises, though there were several changes. The bank has ceased to define China's economic growth as "solid", and noted the slowdown and activity of the authorities in the field of fiscal and monetary expansion. Although the RBA is still awaiting a slow inflation increase, it has revised downwards the forecast for this year's inflation from "just over 2.0%" to 1.75%. This only confirms the low expectations for a rate hike, although it does not raise the risk of a possible reduction, which would be a severe blow to AUD. Although the message did not cause any excitement, the alarm raised around AUD is not canceled. President Lowe had a public speech today about the state of the economy. He said, that there is no strong case for the next interest rate hike as he is not looking to review the inflation target any time soon as he is confident the inflation will return to the level of 2.5%. Moreover, he added, that the trade war could be damaging for the global economy and RBA does not target house prices, but a period of moderation is needed.

On Friday, the publication of the Monetary Policy Report is also planned. The global investors remain skeptical about the attitude of AUD in the following weeks, although a more decisive USD rally would be useful in order to give momentum.

Let's now take a look at the AUD/USD technical picture at the H4 time frame. The market is trading just under the technical resistance at the level of 0.7440. The bulls are trying to push the prices higher and if this level is violated, then the next target for bulls is seen at the level of 0.7564. The strong momentum favors this move up, but the market conditions are now overbought, so in a case of a pull-back, the immediate support is seen at the level of 0.7411.


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