- AUD/USD has continued to move in a sideways channel between the depths of the 0.73 handle as the AUD/JPY slides and keeps the pressures on.
- AUD/USD eeked out a 0.7420 high in London but met supply there and dropped to a low of 0.7389 from where it has drifted back to the 0.74 the figure in early Asia.
AUD/USD was a mixed bag but commodity prices continue to weigh and any weakness in the greenback is quickly scooped up by bargain hunters while the CBR continues to test neckline support with a bearish top on the H&S in place. Looking to metals, copper continues to be met with supply and trade war angst simmers away, at times brought to full-boil which hurts the Aussie as traded as a proxy to China and trade headlines.
Meanwhile, the FOMC was a non-event:
More hikes in store, but not today – Nordea
- The FOMC has left the rate at between 1.75-2% which is unchanged.
- The FOMC was noting that economic growth rate is strong and that the employment rate has stayed low.
There is now a 91% probability that the Fed will raise rates at its September meeting.
Key notes from the statement (nothing on trade tariffs):
- Unemployment rate has ‘stayed low’ versus ‘declined’.
- 12-month inflation ‘remains near’ 2% versus ‘moved close to’ 2%.
- Monpol stance remains accommodative.
- Job gains have been strong in recent months with unemployment rate staying low.
- No changes in guidance or balance of risks.
- Household spending has ‘grown strongly’ versus spending ‘has picked up’ previously.
- Economic activity has been rising at a ‘strong’ rate versus ‘solid’ rate.
Looking ahead, trade is the next risk for AUD/USD traders. analysts at Westpac suggest that Australia should report a 6th consecutive monthly trade surplus in June (11:30amSyd/9:30am Sing/HK):
“Westpac looks for a rise in the surplus from A$0.8bn to $1.1bn, led by higher prices and volumes of coal shipments, producing a 0.8% rise in export values. We see imports about flat. Consensus is $0.9bn.”
AUD/USD levels
Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the price is battling around a congestion of moving averages:
“Technical indicators changed course, now heading lower around their mid-lines. Below 0.7370 chances are of a steeper decline, with strong buying interest still aligned around 0.7300.”
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