Financial market research and analysis

As expected, the Reserve Bank of Australia (RBA) maintained its cash rate unchanged at 1.5%. Governor Lowe warned of a potential slowdown in the growth rate by the end of the year, mostly due to a bumpy recovery in commodity prices. The AUDUSD weakened to 0.7444 in Sydney, yet losses remained limited a touch above the 50-hour moving average. There could be a rising potential for renewed strength toward 0.7500/0.7580 area, on the back of a recent golden cross formation on hourly basis (50-hour moving average crossed above the 200-hour moving average). The key support is seen at 0.7448 (major 38.2% retracement on Dec 1st to Dec 5th rise), if broken, should signal a short-term bearish reversal.

The post-Italian referendum short squeeze sent the EURUSD to 1.0796 on Monday. The recovery could extend to 1.0817 (major 38.2% retracement on post-Trump decline), where solid offers should keep the pair in the bearish trend heading into Thursday’s European Central Bank (ECB) meeting. The EURGBP hovers around the 0.8422, half way from the post-Brexit squeeze. The strengthening appetite in the pound suggests a re-test of the 200-day moving average (0.8365) on the downside, before a further slide to 0.8225 (major 61.8% retrace) is considered.

Cable consolidates gains above its 100-day moving average (1.2728). Firming positive momentum should encourage a further rise to 1.3000 mark, before the critical 1.3041 (major 32.8% retracement on post-Brexit sell-off). Below 1.3041, the GBPUSD is considered in the mid-term bearish trend, hence the pound’s appreciation thus fat does not compromise with the hawkish divergence between the the Federal Reserve (Fed) and the Bank of England (BoE).

Gold continues facing a solid short-term resistance by its descending 100-hour moving average ($1175). High US yields and firm risk appetite should limit any upside attempt in yellow metal prices. We expect a drawback to $1166/$1160 area (weekly support).

The positive momentum in WTI has faded after the price of a barrel reached almost a five-month high at $52.85. The MACD turned negative on the hourly chart, suggesting a short-term downside correction towards $51.00 (minor 23-6% retracement on Nov 29th to Dec 5th rise), before $49.86 (major 38.2% retrace), which should distinguish between a short-term positive development to $55.00 and a further downside correction.