- RBA rate cut expectations exerted some fresh pressure and contributed to the recent downfall.
- A modest USD pullback from multi-week tops extended some support and helped limit losses.
The AUD/USD pair was seen oscillating in a narrow trading band through the early North-American session, consolidating the recent slide to 1-1/2 week lows.
The pair extended its retracement slide from near three-month tops set last week and remained under some selling pressure for the fourth consecutive session on Wednesday amid expectations that RBA will cut interest rates sooner rather than later.
In fact, Westpac – one of the big four Australian banks brought forward the timing of the next interest rate cut and now expects the RBA to deliver a 25 bps interest rate cut in October as compared to the previous forecast of a rate cut in November.
This coupled with the fact that investors continued scaling back expectations of a 50 bps rate cut by the Fed, at its upcoming meeting on July 30-31, lifted the US Dollar to fresh five-week tops on Wednesday and further collaborated to the downfall.
However, a modest intraday USD pullback, primarily on the back of some profit-taking led by sliding US Treasury bond yields, helped limit further losses ahead of the US economic releases – flash manufacturing and services PMI, along with New Home sales data.
Apart from the USD price dynamics, traders will further take cues from the RBA Governor Philip Lowe’s speech during the Asian session on Thursday and the incoming US-China trade-related headlines, which remains a key overhang on the China-proxy Australian Dollar.
Technical levels to watch
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