- The ongoing USD upsurge continues to exert downward pressure on the major.
- Westpac anticipates an early RBA rate cut and added to the prevalent selling bias.
- A positive US-China trade-related development does little to lend any support.
The AUD/USD pair weakened farther below the key 0.70 psychological mark and dropped to 1-1/2 week lows during the Asian session on Wednesday.
The pair extended its retracement slide from near three-month tops set last Friday and remained under some selling pressure for the fourth consecutive session amid the ongoing US Dollar upsurge to near five-week tops.
As investors continue scaling back expectations for an aggressive monetary easing by the Fed at its upcoming meeting on July 30-31, the greenback was further supported by a deal to raise the US government debt ceiling.
Meanwhile, the Australian Dollar was further weighed down by the fact that one of the big four Australia banks – Westpac brought forward the timing of the next interest rate cut by the Reserve Bank of Australia (RBA).
The investment bank now expects the RBA to deliver a 25 bps rate cut in October as compared to the previous forecast of a rate cut in November and exerted some additional downward pressure on the domestic currency.
Meanwhile, a positive trade-related development – wherein the officials from the US and China were reported to begin in-person trade talks sometime next week, failed to lend any support to the China-proxy Australian Dollar.
Moving ahead, Wednesday’s US economic docket – featuring the releases of flash manufacturing and services PMIs, along with New Home Sales data for June, will now be looked upon for some short-term trading opportunities.
Technical levels to watch
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