Weekly Outlook | Markets Prepare For Quieter Summer Holidays

Last week’s trading was wrapped up with slight positive risk sentiment. While the Dollar only lost slight momentum against other currencies, geopolitical tensions remained subdued causing the prices of gold and oil in particular to remain rather weak. The US NFP jobs report caused a positive surprise for market participants while the ADP data previously disappointed. Especially the ADP report helped the market sentiment to remain positive and all eyes might now be on the FED. On Wednesday, the FOMC meeting minutes from the last rate decision might hence shed some light as well. Despite no news are expected the pressure on Jerome Powell to cut rates keeps rising.

Meanwhile, this week will bring the focus to both rate decisions from Australia and New Zealand. The RBA is expected to cut rates (currently at 3.85%) as we will examine below. On the other hand, the RBNZ is likely not adjusting rates (currently at 3.25%).

Important events this week:

– AU- rate decision– The Royal Bank of Australia is expected to cut interest rates down to 3.60% from the current 3.85%. While the move is currently expected the AUD had already been under some pressure, which started earlier last week. The positive risk sentiment in equities remains positive but has also lost some momentum. A push to the downside in the AUDUSD currency pair might hence be on the cards.

AUDUSD daily chart

The daily chart of the AUDUSD currency pair still shows a steady uptrend. Yet, the market might now be ripe for a correction to lower levels. The market looks capped below the rising trendline in blue color and hence a retracement towards the 50-moving average at around the 0.6470 could be on the cards. The interest rate decision will be held on Tuesday, July 08 at 06:30 CET.

– NZ- interest rate decision– Following the recent rate cut in May, the RBNZ is not expected to reduce interest rates during their meeting this week. As a result the NZDUSD currency pair might be able to rise further. Since the current trend looks positive and might hence continue fresh upside momentum might be seen.

NZDUSD monthly chart

The monthly chat above shows that the positive momentum is still intact. Similarly to the AUDUSD currency pair the upside might continue, in particular if the demand for the Greenback remains weak. A breakout above the zone at 0.6100 should hence be taken as a confirmation for a breakout to the upside. The price might then continue towards the technical resistance zone. The interest rate decision will be held on Wednesday, July 09 at 04:00 CET.