Investors Lock Gaze on US Stimulus Talks, RBNZ Decides on Policy

EQUITIES GAIN, SAFE HAVENS SLIDE, ON OPTIMISM OVER A NEW US FISCAL PACKAGE

The US dollar traded lower against the majority of the other G10 currencies on Monday and during the Asian morning Tuesday. It underperformed against NOK, CAD, AUD, NZD, and GBP in that order, while it eked out gains only versus EUR, JPY, and CHF. The greenback was found virtually unchanged against SEK.

FTSE 100 — TECHNICAL OUTLOOK

In the beginning of August, the FTSE 100 reversed to the upside and is now trading above a short-term upside support line taken from the low of August 3rd. Currently, looking at our 4-hour chart, it seems that the index is painting a failure swing bottom picture, which may help more bulls to join in, especially if the price climbs above the 6112 barrier, marked by the current highest point of August. We will take a bullish stance for now.

AUD/JPY — TECHNICAL OUTLOOK

AUSD/JPY continues to balance above a short-term upside support line taken from the low of June 26th. Looking at our oscillators, the RSI and the MACD, both started pointing higher, indicating an increase in the upside momentum, which may support a further continuation move north. As long as the rate stays above the aforementioned upside line, we will remain positive with the near-term outlook.

WILL THE RBNZ STAND PAT AGAIN?

Tonight, apart from developments surrounding the broader market sentiment, NZD-traders may also pay attention to the RBNZ monetary policy decision. At its previous gathering, the RBNZ decided to keep interest rates and its Large-Scale Asset Purchase (LSAP) program unchanged, with officials noting that their nation has contained the spread of the virus, enabling an earlier resumption of economic activity than assumed in May. However, they highlighted that the appreciation of their local currency has placed further pressure on exports and that the balance of economic risks remains to the downside, adding that they remain willing to ease their policy further if deemed necessary.

AS FOR TODAY’S EVENTS

During the European morning, the UK employment report for June is due to be released. The unemployment rate is forecast to have risen to 4.2% from 3.9%, while average weekly earnings including bonuses are expected to have declined 1.2% yoy after sliding 0.3% in May. The excluding-bonuses rate is also expected to have fallen, to -0.1% yoy from +0.7%. The case for a weak report is supported by the KPMG and REC, UK Report on Jobs for the month, in which it was noted that starting pay for both permanent and short-term staff fell further in June as demand for workers remained weak and labor supply continued to increase.

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