The Reserve Bank of Australia increased its benchmark interest rate from 0.5% to 1.35% on Tuesday and It is the third consecutive month in which the central bank has hiked rates. The RBA confirmed more hikes would come to curb surging inflation set to occur over the coming months.
The central bank predicts inflation will peak at the end of this year and fall back into the 2-3% range next year. RBA Governor Philip Lowe said the bank was taking the hard but necessary steps to control soaring inflation in Australia. “The size and timing of future interest rate increases will be guided by the incoming data and the board’s assessment of the outlook for inflation and the labour market,” he added.
Asian shares traded higher on Monday in hopes of US president Joe Biden is reportedly planning to announce a drastic reduction in tariffs against China this week. While Chinese Vice Premier Liu has voiced concern about American tariffs on Chinese goods in an online meeting with US Treasury Secretary Janet Yellen.
Crude oil futures retreated from the early session highs weighed down by the strong US dollar. Meanwhile, the oil prices ended higher on Monday after the strike in Norway threatened to disrupt oil and gas production. The strike is expected to cut oil and gas production by 89,000 barrels per day, of which gas production will be 27,500 barrels per day.
In the currency market, EURUSD plunges to its lowest level in 2 decades of 1.0280. At the time of writing, the currency pair rebounded back to above 1.0300. On the other hand, the U.S. Dollar Currency Index, which tracks the greenback against six major currencies surged to the highest level since November of 2002.
The precious metal struggling to find the upside momentum. The metal trades flat on Tuesday. However, the metal is expected to regain momentum after the release of the Federal Open Market Committee (FOMC) minutes, which are set to be released on Wednesday.
On the data front, Eurozone and Germany reported mixed services PMI figures. The UK Services PMI was revised higher to 54.3 in June from a preliminary estimate of 53.4. China’s services activity in June bounced back into expansionary territory for the first time since February.
Worldwide, more than 549 million people have been confirmed infected and more than 6.3 million have died. The United States has confirmed over 87.5 million cases and has had more than 1017,200 deaths from COVID-19, the highest total in the world.
Technical Outlook and Review
EURUSD: Technically the overall trend looks bearish after the heavy selling pressure. However, if the pair find some support above 1.0250, we may see a short-term retracement to 1.0400 and 1.0500.
The important levels to watch for today: Support- 1.0280 and 1.0250 Resistance- 1.0350 and 1.0380.
GOLD: For today, $1,794 is the immediate support level, followed by $1,788. If the pair breaks below the $1,788, the slump will quickly extend toward the $1,780 mark. On the upper side, gold is likely to find immediate resistance at $1,816, any break above the $1,816 level could lead the prices of the precious metal towards the next resistance levels of $1,822 and $1,830.
The important levels to watch for today: Support- 1794 and 1785 Resistance- 1816 and 1822.
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