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This week the focus was on the RBA and RBNZ. As expected, the RBA held interest rates which sparked a small rise for the Australian Dollar. The currency, however, was largely affected by President Trump’s tweets over the weekend suggesting they were adding more tariffs on to China. This weakened the Australian and New Zealand Dollar on the open as they are affected heavily by the Chinese economy. The President has recently tweeted saying they have imposed 25% tariffs on 250 Billion Dollars’ worth of goods and that the process has begun to place an additional 25% on the remaining 325 Billion Dollars.
The RBNZ cut interest rates to 1.5% as forecast. The market expected the RBNZ to remain dovish and suggest further cuts in the near future, however, that wasn’t to be as they don’t see any reason to continue to cut rates further just yet. This saw the NZD recover quickly from the initial fall and price remains above the yearly lows.
The market moved from a risk on to risk off sentiment as concerns over the China tariffs continued, the Dow Jones fell by 3.8% as investors moved from the stock markets to the safe havens such as JPY.
The USD Index remained subdued this week despite the trade war tensions between the US and China. We have seen price remain below the key demand zone which suggests further USD weakness to come.
As you can see from the chart above the AUDUSD market gapped lower. The price did close the gap and looks to be closing back within the previous candle’s range. This current demand zone is being defended heavily and sellers look out of steam here.
The NZDUSD price held above the yearly low despite the RBNZ rate cut. This was largely due to the market pricing in the rate cut. If the current weekly candlestick closes, as shown above, we could anticipate further upside for the NZDUSD.
USDCHF fell this week in line with our expectations and we expect this to continue. CHF long contracts were one of the main reasons we looked for this market to move lower. The weekly close lower suggests we can look for further short opportunities next week.
GOLD remained within the weekly consolidation pattern this week despite the trade tensions rising between the US and China. This chart still remains bullish and we do expect the price to break out and head back towards the $1350.00 highs.