- AUD/USD is currently trading at 0.7022 between a range of 0.6996 and 0.7024.
- AUD/USD stalling in the July recovery at prior resistance.
AUD/USD is held up in its advance as markets dial down the prospects of deeper Federal Reserve cuts. The Fed seems most likely to cut rates once by 25bp in 2019 and then leave rates on hold through 2020 rather than embarking on a series of rate cuts.
There have been three rate cuts priced into futures markets by end-2019 which would entail the Fed undoing nearly all of the tightening enacted in 2018, which now seems quite unlikely unless the US economy slows down much more sharply than we (and the Fed) currently anticipate. Data of late has supported a less dovish bias.
The focus in the immediate future, eyes now turns back to the Australian economy and jobs data. “We anticipate some give back in June from May’s election driven boost to employment. We forecast +5k for headline Jun employment, the participation rate to remain at 66% and the unemployment rate to remain at 5.2%. The risk is for the unemployment rate to edge higher should more people be looking for work,” analysts at TD Securities explained.
On a technical basis, AUD/USD is approaching a very tough band of resistance, namely 0.7048/91, noted analysts at Commerzbank:
“This is the May high and the July high so far, the 200-day ma and the downtrend. It is likely to hold the initial test and we note the 13 counts on the intraday charts, we would allow for failure here and a near term slide lower. Further up resistance can be spotted at the 0.7207 February high. The 0.6911 10th July low guards underlying support at 0.6865 the 17th May low and the mid June low at 0.6832.”