Forex Market Reacts to Surprise Rate Hike in Australia, Await Canada's Rate Decision
07 June 2023
Yesterday, the forex market experienced a significant shock due to the unexpected rate rise in Australia. Today, we have another rate decision on the horizon, this time from Canada. Interestingly, the consensus among analysts is that the rates will remain unchanged in Canada, making any potential increase a noteworthy surprise.
As we enter the European session, the calendar has already revealed some disappointing economic figures. Australia's GDP came in below expectations at 0.2% (versus an expected 0.3%), China reported a lower trade balance, and Switzerland saw a higher unemployment rate. It remains to be seen if this trend of underwhelming data will persist throughout the rest of the day.
In the market, investors are still processing Saudi Arabia's decision to cut oil output. Yesterday, there was an attempt at a reversal by buyers, but it lacked encouragement, and today the price continues its decline steadily. Precious metals are currently moving sideways, resulting in a rather uneventful chart. We must patiently await more favorable conditions.
In the forex market, there is a general sense of sideways movement this week. The US Dollar (USD) and Japanese Yen (JPY) show little inclination for significant moves. The Australian Dollar (AUD), however, stands out as the winner of the week so far, as mentioned in the preceding paragraphs.
Lastly, let's briefly examine the performance of the indices, which have remained resilient. The S&P 500 and Nasdaq are flirting with new yearly highs, Dow Jones is approaching the upper boundary of a triangle pattern, and the DAX is holding steady around the psychological level of 16,000, demonstrating a clear appetite for further gains.