AUD/USD survives the RBA theme, for now, and test 0.7090 tops

• Aussie under pressure as data continues to weigh.
• AUD/USD is currently trading at 0.7085 between a narrow range of between 0.7092 and 0.7056.

 The AUD is flirting with key support (0.70) and there is  a risk of substantial rate cuts since the early Feb change of RBA policy bias due to clear signs of slower growth in the Australian economy, meaning that the RBA could capitulate on its long-held reluctance to cut rates below 1.5% is weighing on the currency.  

Data from overnight showed that the NAB business conditions fell from +4 to +2 and business confidence fell from +7 to +4, easing as expected but catastrophic. Separately, home loans in Jan -1.2%/m with owner-occupier loans -1.3%/m and investment lending -4.1%/m (mkt: -2%, 0% and -1.5%). With house prices falling and no catalyst for a rebound, buyers are clearly on the sidelines and waiting for a better time to buy. “RBA rate cut talk should remain the key topic for AUD in coming weeks, though the focus is very much on Jul-Aug as the likely window for the first move and a cut is already fully priced by Sep-Oct” – analysts at TD Securities noted

AUD/USD levels

Analysts at Commerzbank explained that AUD/USD bounced higher yesterday, and they would allow for this to extend towards the 55 day ma at 0.7126 and the near term resistance line at 0.7155.

“Currently our Elliott wave counts are negative and we look for further weakness to .6950, this is the 61.8% retracement of the move up from January 2019. There is scope for the .6857/78.6% retracement. Rallies will find initial resistance at .7125 (55 day ma) and .7207 (end of February high) and are likely to remain capped by the .7237 200 day ma. Price action in January was exhaustive – the market charted a hammer (reversal). This suggests the down move ended at .6738.”