European trading platforms closed mixed on Monday as Europe fell under recession. ECB and the Bank of England also hinted at further interest rate hikes in the coming months.
In the US, stocks closing in the green zone raised risk appetite, which pushed dollar to a slight decline. And today, local markets will be closed due to the Independence Day celebrations in the region.
Regarding statistics, Purchasing Managers Index (PMI) data from the Institute for Supply Management (ISM) showed a decline from 46.9 points to 46.0 points, instead of rising to 47.2 points. Even so, market sentiment remained positive, most likely because investors seem to be beginning to get the impression that the Fed will not raise interest rates. They may continue to verbally promise to raise them if necessary.
Among the important events for today, the outcome of the RBA's monetary policy meeting should be highlighted as the bank followed the example of its colleagues. They did not raise the key interest rate, leaving it at the previous level of 4.1%. The bank said they see inflation already passing its peak.
Despite this decision by the central bank, the Australian dollar only slightly reacted to the news, first falling against dollar, and then fully recovering the decline. As for dollar, demand dipped due to growing hopes that the Fed will no longer raise interest rates. The inversion of 2-year notes and 10-year US Treasury bonds may also force the bank to lower interest rates by this winter to prevent a collapse of the local bond market.
Trading activity will be low today due to the absence of US investors in the market. At the same time, European stock markets will play out yesterday's positive from the US, while the oil market will show an expected reduction in US inventories.
Forecasts for today:
USD/CAD
The pair continues to remain above the support level of 1.3235 in the wave of low market activity due to the holiday in the US. However, the overall positive sentiment towards risky assets and crude oil may push the pair to decline to 1.3125.
XAU/USD
The pair rose in price due to the weakening dollar demand and cautious growth of risky assets in the absence of US investors in the market. If the price rises above 1931.10, there will be a further increase to 1955.00.