On April
30th we discussed the possibility of a downtrend forming in the
AUDNZD pair, by price breaking through the support that existed at that time
where it met the 200 period Simple Moving Average on the four-hour chart, and
forming a new lower low.
Since then it has done all
that might have been expected of it in this respect. It has been helped by
decisions taken by the monetary authorities in both New
Zealand and Australia : the Kiwis raised core
interest rates and the Aussies kept them on hold.
There is now considerable
discussion taking place in Australia about the forthcoming national budget,
which is expected to introduce a level of austerity that has hitherto not been
known in that country. It can be expected that the government cutting spending
power in this way will possibly lead the Reserve Bank to take on an easing
rather than a neutral bias, as at present. This could further weaken the
Australian dollar. AUDNZD may have further to fall from here.
PMIs are more important than ever
Today sees the publication of
the Purchasing Managers’ Indexes for a number of EU countries. While these are
always important they have an added edge on this occasion, as the European Central
Bank (ECB) will be watching all such indicators to see if there is scope for a
further lowering of the core interest rate, or some other easing measures, when
it makes its monthly monetary policy statement this coming Thursday.
There is considerable concern
in the ECB about the threat of low or even negative inflation (deflation) in
the Euro zone. While all the signs indicate that the ECB would take measures
that would increase inflation, this is opposed by the powerful German
Bundesbank, and by the German political establishment. The outcome of this
tussle is worth watching.
No comments:
Post a Comment