The Usd started the week on a strong note, with the only major currency that did not lost any ground to the Usd being the Australian dollar, aided by the upcoming RBA interest rate meeting, scheduled on Monday night. Market participants expect the RBA to raise the Cash Rate by another 0.25%, up to 4.50%.
The Reserve Bank of Australia is the only central bank that is in a tightening cycle, and it is thought that the Bank of Canada will follow relatively soon. This should help the Australian and Canadian dollars maintain strong momentum over the upcoming weeks of trading, breaking the current swing points.
There is only one red-flag report scheduled on Monday, and the market expects the ISM Manufacturing Index to be released at a read of 60.00, making it the highest read of the last six years. The next few days are packed with top-tier news reports.
If the ISM comes in as expected or even better it should give a strong boost to the overall sentiment of the market, helping equities and commodities gain, and splitting the major pairs as Aud and Cad gain, while the European pairs lose ground.
The daily price action of S/P futures trade looks bearish, after the market has been rejected four times from the 1210 resistance area, with the most recent failure coming on Friday. On each of these failed attempts the market went on to base in the 1185.00 area, the same place where the futures market is holding right now.
A move below the 1185.00 level will probably push equities towards the 1150.00 area, and will help the dollar index head straight into the 83.00 area.
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