The Reserve Bank of Australia’s Dr. Chris Kent has been speaking with comments trickling through.

RBA’s Kent: Expansion of balance sheet adding monetary stimulus

The latest round of comments has been more prominent in terms of the currency market due to the easing bias and rhetoric.

Dr Kent’s comments were eagerly watched after Thursday’s game-changing speech by governor Phil Lowe.

The market has been leaning more to the downside following Lowe’s comments when he said more easing would be required to support the economy while dropping a strong hint that the central bank could begin buying long term government bonds

Meanwhile, in the latest round of comments, Kent has confirmed that there is some room to cut cash rate further, although he said that they cannot speculate on details of easing.

However, he said that one option is to buy longer-dated bonds, while they would bond be regular and aimed to bring down yields.

He stressed that the board is considering case for further easing although explained that the RBA has not conducted a formal policy framework review.

AUD/USD technical analysis

 

More to come…

Meanwhile, the market is getting set for the next major event for AUD today:

When are the RBA minutes and how might they affect AUD/USD?

 

  • WTI remains pressured after stepping back from the resistance line of a short-term triangle.
  • 50-bar SMA offers immediate support, 200-bar SMA adds to the downside filter.
  • A clear break of $42.10 becomes necessary to convince buyers.

WTI fails to keep the late-US session bounce off $40.79 while declining from $41.03 to $40.90 during the early Tuesday morning in Asia. In doing so, the energy benchmark keeps an ascending triangle formation established since October 02 while taking the rest on the 50-bar SMA in the meantime.

Considering the normal RSI conditions, the oil sellers are less likely to look for entries unless witness a break of $40.75 immediate support, comprising 50-bar SMA.

However, the support line of the mentioned triangle and 200-bar SMA, respectively around $40.20 and $39.70, will act as tough nuts to crack for the WTI bears.

On the flip side, the upper line of the triangle, at $41.47 now, won’t be enough to recall the bulls as September 04 high near $42.10 challenges the black gold’s further upside.

Should the quote rises beyond $42.10, the September month’s high of $43.55, followed by the August month’s peak surrounding $43.85, will be in the spotlight.

WTI four-hour chart

Trend: Further weakness expected

 

  • AUD/NZD is offering a case for both the bulls and the bears.
  • The daily resistance is a keen target, but eyes are on weekly support. 

The price of AUD/NZD is testing a long term support which is expected to hold. However, if it does not, the downside will be in focus towards 1.0630 ahead of 1.04 as a long term target. 

Bulls, on the other hand, are seeking a test of the daily resistance located in the 1.0760s.

The following is a top-down analysis that illustrates the market structure and the aforementioned target areas from both a bullish and bearish perspective.

Monthly chart

As can be seen, the price is supported at a critical level.

If the support gives, then the focus will be on the downside towards the 1.04 area. 

Weekly chart

The weekly chart shows that the price is trading within a bearish impulse which will have more legs on it if the monthly support is broken.

If support holds, then the focus will be on the upside.

Daily chart

On the other hand, if the support holds and the resistance of the early October structure also holds, then the bears could be in with a discount. 

1.0630 could be the next stop, however, and offer bulls a discount in targeting the aforementioned daily resistance. 

  • AUD/NZD is offering a case for both the bulls and the bears.
  • The daily resistance is a keen target, but eyes are on weekly support. 

The price of AUD/NZD is testing a long term support which is expected to hold. However, if it does not, the downside will be in focus towards 1.0630 ahead of 1.04 as a long term target. 

Bulls, on the other hand, are seeking a test of the daily resistance located in the 1.0760s.

The following is a top-down analysis that illustrates the market structure and the aforementioned target areas from both a bullish and bearish perspective.

Monthly chart

As can be seen, the price is supported at a critical level.

If the support gives, then the focus will be on the downside towards the 1.04 area. 

Weekly chart

The weekly chart shows that the price is trading within a bearish impulse which will have more legs on it if the monthly support is broken.

If support holds, then the focus will be on the upside.

Daily chart

On the other hand, if the support holds and the resistance of the early October structure also holds, then the bears could be in with a discount. 

1.0630 could be the next stop, however, and offer bulls a discount in targeting the aforementioned daily resistance. 

  • Gold struggles to keep recovery moves from $1,900.67.
  • Risks dwindle amid US stimulus deadlock, virus woes and Brexit pessimism.
  • Second-tier data, risk factors to entertain the bullion traders.

Gold prices fade uptick to $1,905.03, currently around $1,904.14, during the initial Asian session on Tuesday. The yellow metal managed to cheer the US dollar weakness, before stepping back from $1,918.58, the previous day. The reason for the quote’s recent weakness could be traced from the receding odds of any coronavirus (COVID-19) stimulus from the US. Also weighing the trading sentiment could be the lack of COVID-19 vaccine and no signs of fresh Brexit talks.

Bulls remain challenged, bears need fresh power…

Although risk-off mood directs the global traders toward the US dollar, which indirectly favors the gold sellers, ingrained weakness concerning the US economic and political issues probe the greenback bulls. As a result, gold traders are waiting for clear direction while respecting the US dollar moves in the meantime.

Among the challenges faced by America, talks concerning the COVID-19 aid package becomes the key hurdle for now. Even if Republicans have finally shown readiness to go big on the amount, Democrats are finding it difficult to have an agreement for voting during this week, as suggested by the Senate Leader Mitch McConnell. Also probing the market optimism is the upcoming US presidential elections, in November, as well as a lack of vaccine to cure the deadly virus.

Not only the US but the global scientists are also struggling to find the vaccine for the pandemic while trials by the key players have taken a halt a few days back.

Brexit pessimism also remains on the table despite the European Union’s (EU) readiness to talk. The reason could be traced from the UK’s refrain from respecting the bloc’s intentions unless showing a clear sign to overcome important issues like the level playing field, governance and fisheries.

Sino-American and the China-Aussie tussles are also playing their roles to heavy the risks whereas chatters concerning Taiwan and Hong Kong join the line as well.

Amid these plays, Wall Street summed up the Monday’s trading on a negative side but the US 10-year Treasury yields closed in positive around 0.77% at the end of the North American session. Currently, S&P 500 Futures rise 0.15% to 3,438 after five days of consecutive declines.

Looking forward, minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy and interest rate decision by the People’s Bank of China (PBOC) can offer immediate moves to gold prices. Though, risk updates will be the key to follow for near-term direction.

Technical analysis

Unless breaking an ascending trend line from September 28, at $1,902 now, followed by the $1,900 threshold, sellers are less likely to eye the monthly bottom surrounding $1,873.

 

  • Gold struggles to keep recovery moves from $1,900.67.
  • Risks dwindle amid US stimulus deadlock, virus woes and Brexit pessimism.
  • Second-tier data, risk factors to entertain the bullion traders.

Gold prices fade uptick to $1,905.03, currently around $1,904.14, during the initial Asian session on Tuesday. The yellow metal managed to cheer the US dollar weakness, before stepping back from $1,918.58, the previous day. The reason for the quote’s recent weakness could be traced from the receding odds of any coronavirus (COVID-19) stimulus from the US. Also weighing the trading sentiment could be the lack of COVID-19 vaccine and no signs of fresh Brexit talks.

Bulls remain challenged, bears need fresh power…

Although risk-off mood directs the global traders toward the US dollar, which indirectly favors the gold sellers, ingrained weakness concerning the US economic and political issues probe the greenback bulls. As a result, gold traders are waiting for clear direction while respecting the US dollar moves in the meantime.

Among the challenges faced by America, talks concerning the COVID-19 aid package becomes the key hurdle for now. Even if Republicans have finally shown readiness to go big on the amount, Democrats are finding it difficult to have an agreement for voting during this week, as suggested by the Senate Leader Mitch McConnell. Also probing the market optimism is the upcoming US presidential elections, in November, as well as a lack of vaccine to cure the deadly virus.

Not only the US but the global scientists are also struggling to find the vaccine for the pandemic while trials by the key players have taken a halt a few days back.

Brexit pessimism also remains on the table despite the European Union’s (EU) readiness to talk. The reason could be traced from the UK’s refrain from respecting the bloc’s intentions unless showing a clear sign to overcome important issues like the level playing field, governance and fisheries.

Sino-American and the China-Aussie tussles are also playing their roles to heavy the risks whereas chatters concerning Taiwan and Hong Kong join the line as well.

Amid these plays, Wall Street summed up the Monday’s trading on a negative side but the US 10-year Treasury yields closed in positive around 0.77% at the end of the North American session. Currently, S&P 500 Futures rise 0.15% to 3,438 after five days of consecutive declines.

Looking forward, minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy and interest rate decision by the People’s Bank of China (PBOC) can offer immediate moves to gold prices. Though, risk updates will be the key to follow for near-term direction.

Technical analysis

Unless breaking an ascending trend line from September 28, at $1,902 now, followed by the $1,900 threshold, sellers are less likely to eye the monthly bottom surrounding $1,873.

 

  • AUD/JPY remains on the back foot after six consecutive days of declines.
  • Bearish MACD, inability to bounce back beyond the key Fibonacci retracement suggest further downside.

AUD/JPY drops to 74.48 during the early Tuesday morning in Asia. The pair bounced off 74.52 to 74.95, before declining to 74.40, the previous day. In doing so, the quote marks sustained trading below 61.8% Fibonacci retracement of its June-August upside.

Not only the failures to cross the key Fibonacci retracement but bearish MACD conditions also direct AUD/JPY sellers to attack a four-month-old upward sloping trend line, at 74.32 now.

While September month’s low of 73.97 can probe the bears after the break of the mentioned support line, any more downside will not hesitate to visit the 200-day SMA level of 72.85 and the June month’s low of 72.52.

Alternatively, an upside clearance of 61.8% Fibonacci retracement level, at 74.80, will find multiple barriers around 75.00 portrayed during the early-October.

In a case where the bulls manage to cross 75.00 on a daily closing, the 50% Fibonacci retracement near 75.50 and a falling trend line from August 31, currently around 76.15 will gain the market’s attention.

AUD/JPY daily chart

Trend: Bearish

 

  • AUD/USD attempts recovery moves from 0.7057, nears three-week low flashed on Friday.
  • Receding hopes of US stimulus, Brexit deal and worsening virus conditions heavy the risks off-late.
  • China data, Trump’s comments managed to offer early-Monday recovery.
  • Speech from RBA’s Kent, RBA minutes in the spotlight amid a light calendar elsewhere.

AUD/USD struggles to keep bounces off 0.7055/50 rest-zone, currently around 0.7070, at the start of Tuesday’s Asian session. Having initially benefited from risk-on mood during the early Monday, the quote marked losses by the end of the day as hopes of further stimulus, virus vaccine and a Brexit deal fade despite initial optimism. Traders await comments from RBA policymaker, followed by the RBA minutes, to determine immediate moves while nearing the key support line stretched from June 15.

Everything depends upon the politics…

Be it the US Democratic-Republican jostling over the coronavirus (COVID-19) stimulus or the UK’s refrain from appreciating the European Union’s (EU) recent softness, politics play the key role in each play. Also, there are concerns about US President Donald Trump’s push for the COVID-19 vaccine as the White House Chief keeps lagging in the polls concerning the next week’s presidential election. As a result, markets fail to keep the upbeat sentiment portrayed during early Monday amid the same fears faced late last week.

Having heard about a 48-hour deadline to the White House, till Tuesday night, for the pandemic relief package talks by US House Speaker Nancy Pelosi, traders knew that Treasury Secretary Steve Mnuchin and Democratic representative Pelosi see major differences to seal the deal. Even so, US Senate Majority Leader Mitch McConnell signaled that there will be a vote on the much-awaited stimulus during this week. This contrasts the comments from Minority Leader Chuck Schumer who recently said that the Republican proposal remains unacceptable.

Elsewhere, the EU showed readiness to enthuse efforts of writing the Brexit deal but the UK doubts the bloc’s readiness to overcome the key issues like fisheries, level playing field and governance.

Furthermore, US President Trump’s comments suggesting that the COVID-19 vaccine will be out very soon differ from the halt in the clinical trials of the headline contestants.

Talking about the data, China’s Q3 GDP managed to mark recovery moves, despite lagging the forecast, whereas Industrial Production and Retail Sales also improved in September.

Against this backdrop, Wall Street benchmarks lost over 1.0% by the end of Monday’s trading whereas the US 10-year Treasury yields marked a gain of 2.8 basis points (bps) at the same time.

Moving on, RBA Assistant Governor (Financial Markets) Christopher Kent will cross the wires at 23:30 and will be watched to confirm last week’s bearish comments from the RBA Governor Philip Lowe. Following that minutes of the latest monetary policy meeting by the Reserve Bank of Australia (RBA) will be closely observed to ascertain the pessimism among the policymakers. It’s worth mentioning that the risk catalysts are likely to keep the driver’s seat in any case and shouldn’t be ignored.

Technical analysis

Failures to cross 100-day SMA, currently around 0.7100, push AUD/USD sellers toward attacking an upward sloping trend line from mid-June, at 0.7054 now, a break of which can recall the 0.7000 threshold on the chart.