Last night's RBA meeting left interest rate markets pricing in just another 10 bps of hikes through the next 12 months after a no change in rates last night. The accompanying statement did not provide any additional evidence, which leaves a slightly more Dovish tone. The central bank of Brazil also hiked rates last week, but delivered less than markets anticipated with also a dovish tone. Seems that the pace of interest rate hikes from the economically sounds countries will begin to fall more in line with the falling interest rates levels of those countries trying to get back on pace. Falling global interest rates decrease interest rate differential advantage relative to the USD, which will support the dollar.
The rally in AUDUSD over the past few days likely completes a 5-wave rally in wave C of a 2nd wave expanded Flat correction. I have included a model of an expanded flat in the chart. I am short 2 units currently at 0.9015, and have offers to sell 3 more units at 0.9080 with stops for all 5 units at 0.9125. The S&P 500 is rallying in a corrective sequence after a clear 5-awve decline from the 1129 highs. The 50% retracement of the impulse decline falls in at 1099.40, with the 61.8% retracement at 1106.45. I will be looking for these levels to hold as our 80 offers in AUDUSD are filled. The spot gold market faces a very similar c-wave of a corrective Flat resistance at $1233/oz.
Just a heads-up, I will be away from the office starting this Thursday and will be gone until the end of August. I am very much looking forward to returning, because we will have lots to do in September
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