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Sean Callow, analyst at Westpac, explains that AUD/USD pair has hit 2 month highs this week despite the RBA rate cut.

Key Quotes

“While the US-China trade truce makes -50bp on 31 July even less likely, the FOMC will surely remain concerned about the impact of trade on business investment and cut no later than Sep. Chair Powell’s testimony is likely to be key for AUD/USD in the week ahead. If he indicates that a cut in July is doubtful, the Aussie recovery should be snuffed out, the pair sliding back below 0.7000.”

“But if Powell offers enough to leave markets pricing >2 rate cuts by year-end, AUD/USD may be able to probe above 0.7100. The ongoing surge in iron ore prices is drawing attention and resources exports overall are strong enough for Australia to produce record trade surpluses.”