This week the Swiss -SNB and Australian RBA bank will decide on interest rates.
The former will make its decision on Tuesday morning, June 18 (5:30 GMT+1). Recent good data from Australia’s labor market reinforces expectations of leaving rates unchanged. An unexpectedly strong employment report, with unemployment falling to 4.0% and a significant increase in full-time employment (+41,000 vs. -2,000 part-time), supports the case for a more restrictive rate level in the longer term.
On Thursday, meanwhile, the SNB will announce its position. No change is expected, rates are expected to remain at their current level of 1.5%.
The divergence between interest rates in Australia of 4.35% and Switzerland of 1.5% is significant. Bank of America recommends a long position on AUD/CHF, driven by strong Australian employment data and the expectation that the divergence in monetary policy between the RBA and SNB will persist at their upcoming meetings. I would add that for long positions we have a positive SWAP which may encourage carry trading.
Technical analysis of AUDCHF
On the H4 chart, the price has reached the channel support. A bullish engulfing formation has appeared. If there is an upward breakout and the price overcomes the 0.5885 level, the MACD will enter an upward phase and an upward divergence will appear. Therefore, it is worth watching the pair, especially since after tomorrow’s RBA decision it may become clear in which direction the chart will go.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions, which you can attend from Monday to Friday.
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