The focus of the market today is the result of the periodic policy meetings of Reserve Bank of Australia (RBA). At the July meeting, RBA kept rates at 1.75% and suggested the possibility of easing further monetary policy. Since that meeting, the Australian economy showed mixed signals with expanding manufacturing activity and increasing inflation. Meanwhile, consumer confidence declined and unemployment rose. According to a Reuters survey, only 60% of analysts predict that the RBA will cut interest rates from 1.75% to 1.5%. In the case of interest rate cut, exchange rate AUD/USD will drop quickly about 0.7450. Conversely, if policymakers delay monetary easing, rates will rise again above the level 0.76.
One other communications market is waiting today to Prime Minister Shinzo Abe of Japan will announce detailed fiscal stimulus package which was announced last week with a large scale over 28 trillion yen. Last week, Yen rose sharply as the Bank of Japan (BOJ) almost didn't significantly change in the monetary policy meeting in July, contrary to the expectations of the major market for a large-scale monetary stimulus as Japanese government determined to revive the economy, which was always bleak in this country. Analysts forecast USD/JPY may fall to threshold 100 if the market does not receive significant support from the information relating to the fiscal stimulus package of Prime Minister Abe.
Notable evolution yesterday was the strongest fall of the CAD when crude oil prices plunged in the first session of the week and WTI oil price sometimes is below 40 USD/barrel for the first time since April 2016. Oil prices began to plummet since early July due to the oversupply of gasoline and refined petroleum products along with signs of rebounding US crude production. Now, National Oil Company Saudi Arabia (Saudi Aramco) lowers oil price strongestly in years, have raised the question of whether oversupply, which made oil prices plunge in 2 years, extends in the coming months.
Tomorrow, August 3rd, Bank of England (BoE) will announce quarterly economic report and results of the periodic policy meeting. Up to 95% of analysts surveyed predicted that BoE will cut rates from 0.5% to 0.25%. Besides, many analysts also said that the BoE is likely to start again the bond purchase program which was suspended since 2012. British Pound is expected to weaken before the meeting of the BOE and after the agency announces the change in monetary policy.
GBP/USD: SELL: 1.3120, TARGET: 1.3100, STOP-LOSS: 1.3270