September 6, 2021 13:44:27
The RBA delivers an updated statement and policy decisions overnight. The central issue is whether the bank delays its plans to implement a taper in its bond buying from A$5 billion to 4 billion later this month. With lockdown extensions still on the cards, near-term and full year growth forecasts look set to be slashed.
The bank has always been prepared to increase policy efforts “in response to further bad news on the health front”. One prominent local bank is even advocating an increase in asset purchases to help deal with the brutal contraction about to hit the economy. But credibility would surely be questioned with Governor Lowe recently saying any additional bond purchases would only have a small effect right now.
AUD/CHF enjoys strong rebound
This pair’s bullish momentum is notable with ten up days out of the last eleven since plunging to a low of 0.6513 a few weeks ago. Prices cut through the lower Keltner band and a rebound was due with the RSI also strongly oversold.
The top of the minor bearish channel has now risen through the 50-day SMA and close to the upper Keltner band. We have now reached the previous breakdown point and a Fib level of the February to August move around 0.68. We may see a pause in the uptrend as we are overbought on short-term momentum indicators. But bulls will target an overshoot higher to the 0.69 zone and the 200-day SMA. Initial support on a dovish RBA comes in at the 50-day SMA at 0.6784.
EUR/AUD to rebound from the bottom of the channel?
This pair has been in a steady bullish channel since March. We’ve spiked lower on the downside on a couple of occasions but always closed within the channel. The topside was broken a few weeks ago but prices tumbled back down. The bears have been in control most recently, similar to the aussie cross above, and we are at the bottom of the long-held ascending channel at 1.5977. The 50-day SMA at 1.6007 is above current prices but has acted as decent support in the past. More downside sees the 100-day and 200-day SMAs either side of 1.58. If we do get a bounce back again, 1.62 is an obvious target with the top of the channel at 1.6348.
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