- US Dollar Index carries the bullish momentum over to the new week.
- Copper futures are down more than 1.5% on Monday.
- There won’t be any macroeconomic data releases from the U.S.
The broad-based greenback strength drags the AUD/USD pair lower on Monday amid a lack of fresh catalysts that could change the mood surrounding the buck. As of writing, the pair was trading at 0.7383, losing 0.2% on the day.
Last Friday’s mixed employment report from the United States failed to impact the USD negatively as it didn’t change the expectations regarding two more Fed rate hikes, one in September and another one in December. The US Dollar Index, which closed the previous week above the critical 95 mark continued to push higher and was last seen up 0.35% at 95.50. In the NA session, the economic calendar won’t feature any data releases from the United States.
Meanwhile, the dismal performance of commodities, especially copper, weighs on the AUD on Monday. As of writing, copper futures were down 1.6% on the day at 2.720.
During the early trading hours of the Asian session on Tuesday, the Australian Industry Group and the Housing Industry Association will be releasing the Performance of Construction Index. More importantly, the RBA is going to announce its rate decision and publish the monetary policy statement.
“We note that the RBA’s glass half full approach is not credible as wages remain tepid and wholesale funding issues persist. Further, with trade tensions still fluid between the US/China and AUD highly sensitive to CNH gyrations (where recent PBoC actions should slow but not halt the pace of depreciation), this antipode should remain on the defensive in the G10,” TD Securities analysts argued in a recently published report.
Technical outlook
The initial resistance for the pair aligns at 0.7400 (daily high/20-DMA) ahead of 0.7440 (Jul. 31 high) and 0.7500 (psychological level). On the downside, supports could be seen at 0.7355 (Aug. 2 low), 0.7315/10 (Jul. 29/Jul. 2 low) and 0.7240 (Dec. 19, 2016 low).
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