Australian Cash Rate – 4th August 2:30pm
The Australian Cash rate is forecasted to remain steady 0.25%, with the current state of the economy and the extra uncertainty added by rising COVID 19 cases. RBA is expected to maintain optimism similar to last month’s RBA minutes where policymakers noted that ‘the downturn had been less severe than feared a few months earlier’, however the rising COVID 19 cases a pessimistic shadow over these expectations.
NZD unemployment rate – 5th August 8:45am
The unemployment rate is forecasted to worsen to 5.5% from the previous 4.2%. , this unemployment data can have far larger impacts as Jacinda Ardern’s government will turn off the COVID-19 wage subsidy tap next month, a move likely to confirm unemployment for thousands of New Zealanders during an election campaign. analysts expect New Zealand’s unemployment to reach 8% and peak at 9.7% next year.
USD NFP & unemployment rate – 7th August 10:30pm
The NFP is forecasted to be 1.51 million compared to last month completely unexpected 4.8m, with unemployment rate forecasted to improve from last months 11.1% to 10.5%. The two figures basically highlight the same conclusion providing evidence suggesting a recovery in the American economy.
Fed Fund Rate
The Federal Reserve keeps federal funds rate steady at 0-0.25%, stating that economic growth is ‘well below’ levels prior to COVID-19. The rationale behind this decision is evident in the release of the advance U.S. GDP last thursday. In the advance GDP report, U.S. GDP plunged by 32.9% in the second-quarter. Although this was better than forecasted, it is still a historic level that is worse than those seen in the Great Depression and Global Financial Crisis. As GDP is the broadest measure of economic activity and a major indicator of economic strength, a huge plunge in GDP shows the effects of the pandemic which will weaken consumer confidence. There was also data released on the rising U.S. consumer spending for the second consecutive month, however, personal income drops further by 1.1%.
Last week, the GBPUSD pair broke past the 1.27258 resistance level and reached a high of 1.31702, indicating a recovery to levels prior to the March bearish plunge. The currency pair may continue its bullish run to the 1.32787 resistance level, however, after 10 consecutive bullish candles and a shooting star closing candle, there is a high possibility of a reversal. This outlook is reinforced by the RSI which highlights that the pair is currently in overbought conditions. The pair is also likely to continue rising and falling between the 1.27258 and 1.32787 support and resistance levels, similar to the trend between October 2019 and March 2020.