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GBP/AUD – Turn or Buy?
The Aussie staged a vicious 2% rally today after the RBA hinted that the currency had weakened enough. As we noted in morning research, “The central bank has to walk fine line between keeping Aussie low enough to make exports competitive while maintaining its value high enough to avoid making imports a massive burden for the consumer.One possible key factor in its change of stance may have been the soaring costs of petrol. Despite crude being at $45/bbl Australian gasoline prices are actually up 6% since the start of the year and the RBA may have been eager to temper the rising burden to the motorists.”
Thursday’s AU employment report could be the key event risk for the pair as any marked decline in labor demand will make the market bearish the pair once again despite the neutral talk from RBA. Meanwhile in UK all eyes will be on tomorrow’s PMI Services report which is the key data point for that economy. The UK central bank has been making hawkish noises about potentially raising rates, but it won’t act unless the data proves supportive.
So in short, if UK PMI Services continues to show healthy expansion, todays nasty selloff in the pair should be viewed as a chance to buy the dip, as long as 2.0800 level continues to hold.