21 May 2019, OctaFX – The Australian dollar declined by 20 pips after the RBA released minutes of the previous meeting which signaled that it would likely cut interest rates in June this year. In the minutes, the bank said that:
As in the previous meeting, members discussed the scenario where inflation did not move any higher and unemployment trended up, recognizing that in those circumstances a decrease in the cash rate would likely be appropriate.
The minutes came at a pivotal period for China. In recent weeks, the US and China have restarted the trade war, which is likely to affect Australia. This is because China accounts for a third of the country’s exports. It also came a day after an Australian election, in which the Conservatives won. The country’s economy is also slowing down for the first time in 29-years as the mining sector weakens.
In the United Kingdom, investors will focus on the inflation hearings expected to happen later today. Specifically, they will listen to the opening statement of BOE governor, Mark Carney. These hearings will come at a time when the country is at crossroads regarding Brexit. Theresa May has also signaled that she will resign in the coming days.
Investors will also focus on the United States. The country is expected to release existing home sales data. In April, investors expect that home sale rose by 2.7%. This will be much better than the previous decline of almost 5%. The total existing home sales are expected to be more than 5.3 million, up from the previous 5.21 million.
AUDUSD technical analysis
The AUDUSD pair declined sharply after the RBA revealed that it will likely cut rates in June. The pair declined to a low of 0.6880. On the hourly chart below, this price is along the lower line of the Bollinger Bands and is above the upper trendline shown below. The RSI has declined to almost the oversold level of 30 while the Relative Vigor Index is along the middle line. The pair will likely continue moving lower as the RBA turns dovish and as the Chinese economy gets affected by the trade conflict.
EURUSD price outlook
The EUR/USD pair was relatively unmoved in the Asian session. The pair is now trading at 1.1162. On the hourly chart, the pair is along the 25-day and 50-day moving averages. The price is also along the middle line of the Bollinger Bands. The volatility has eased slightly as shown by the average true range while the MACD is along the neutral line. The pair will likely remain along these levels today.
GBPUSD price declines
The GBP/USD declined to a low of 1.2725, which was the lowest level since 18 January. On the eight-hour chart below, the price is below the 50-day and 25-day moving averages while the RSI is below the oversold level. The price is also above the Envelopes indicator. Today, the pair will likely continue the downward momentum and possibly test the important low of 1.2700.
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