This expectation is based on Steven's statements on June 15th that rates will climb “at some point” and will depend on July's CPI. Recently growth in China has slowed down with PMI dropping to 57 from 61.9 and this is Australia's trading partner. The Australian Dollar has fallen today as Retail Sales and Building Approvals showed decline. The measure of annual inflation fell below the top range of the RBA's target in June as costs for fuel and clothing dropped. Recently there have been some drops in commodity prices, many traders are saying the RBA is being too optimistic. The RBA forecast growth at 4.25% and CPI at 3.25% and 3% for Core. Fulltime Jobs also fell by 22,000 in May after dropping 57,200 in April, the biggest two-month decline in more than two years. Many consider this a temporary adjustment as the economy become more mining focused. According to 30-day interbank cash-rate futures, there is a 10 percent chance of a 25-basis- point rate cut in August and a 30 percent chance in October. There is unlikely to be any spike on any change in rates. However the accompanying statement could cause some volatility, if the RBA's forecasts to growth and inflation mentioned above are changed, or if any of the issues mentioned are focused on ie drop in jobs, CPI, PMI in china, any worry about Greece causing a lehman's type market meltdown.

If they hike rates, AUD/USD 6A should rally 70-100 pips/ticks. If they cut rates, AUD/USD 6A should sell off 70-100 pips/ticks.
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04:28 GBP Services PMI (53.5 exp, 53.8 prior, 53.0 to 54.5 range)


This is a key indicator of economic health for the UK's economy. Recently the UK has seen a string of negative releases and negative sentiment is starting to get entrenched, the Sterling is at lows against many currencies, and it even dropped versus the US Dollar as other pairs made gains against it. Since January's negative reading, this indicator has been making gains, however it has dropped off in the last 2 months. Last month was only -0.4 lower and not very significant, there was little price reaction. However in May it was -1.7 lower and cable dropped 40 pips in the 1st minute and
then retraced, heading higher unto the US session. While some could have made some pips on this, what is not too good about it is the lack of continuation after the initial spike. For traders who might experience some slippage it is best to get a deviation where the price move continues beyond the level seen in the initial spike. Obviously April's massive 4.6 deviation continued, as did March's smaller -1.1 deviation. So we can see a case where a continuation occurred on even a smaller deviation. This focus on this release is somewhat heightened due to the concern raised recently by the string of bad economic news from the UK and the weak sterling relative to other pairs. Therefore a reading below 52.0 should see the pound gain momentum towards the 1.5910 level, while any figure above 54 will give the Pound some breathing space. There is the possibility of the pound weakening into the release with markets anticipating disappointment. There is also the possibility of a rebound in this number as the last readings included holiday periods and this will make up for those periods.

-If it is 55.0% or higher, GBP/USD should rally 35-55 pips
-If it is 52.0% or lower, GBP/USD should drop 35-55 pips
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