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  • AUD/USD has been taking its cues from the Candian dollar that has been relentless on the bid following the positive news that the US and Canada have finally struck a NAFTA 2 (USMCA) deal.  
  • Pair is trading around 0.7225, the 38.2% retracement of the latest bullish run.

The deal boosted US equities and risk appetite at the start of the week. The Aussie trades as a proxy to materials, industrials, and energy and these were all up more than 1% on Monday –  The latter supported by higher oil prices, with WTI up 2.3%.  

RBA expectations:

There is a unanimous consensus in the markets that  expect  the RBA to pause again at 1.5% tomorrow:

“The Aug and Sep statements were virtually identical and we see no reason for the RBA to deviate from the script,” analysts at TD Securities explained. “Recent data has confirmed the RBA’s optimism – Annual GDP in Q2 expanded at the fastest pace in 6 years and the RBA’s alternative measure of unemployment, the underutilisation rate, fell to 5yr lows. US-China trade tensions and consumption remain ongoing uncertainties.  New news is the view now 3 out of 4 major banks have lifted lending rates. Last month it was “40% of the market” and now closer to 80%, and the Board will discuss a draft of the FSR.  Recent polls have the median forecast for the RBA to hike to 1.75% in Q4’19. TD base case is May and Nov.”

AUD/USD levels

  • Support levels: 0.7190 0.7155 0.7110.
  • Resistance levels: 0.7225 0.7255 0.7300 .

Valeria Bednarik, chief analyst at FXStreet explained that the  38.2% retracement of the latest bullish run is resistance.  

“In the 4 hours  chart, a bearish 20 SMA, which extends its decline below the 200 SMA, converges with the mentioned Fibonacci resistance, while technical  indicators  retreat within  negative  territory, although without clear directional strength. The pair would need to break below 0.7190 to gain downward traction, while bulls could take over the pair only on a steady recovery above 0.7255.”