AUD/USD tops 0.79 on RBA bullishness, USD weakness

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AUD/USD was capped by the April 2016 high of 0.7840 and formed a double top. This did not last too long. A double-whammy of events sent the pair shooting higher. The pair is at the highest level in 26 months.

AUD/USD is currently trading at 0.7915 and the high so far has been 0.7923. Will it reach 0.80? It isn’t that far away as we look into levels last seen over two years ago. Things have certainly escalated quickly.

RBA bullishness

Contrary to the rate statement that lacked any hawkishness, the meeting minutes from the July 2017 showed an incline to raise interest rates. With this, the team led by Phillip Lowe joins his hawkish colleagues at the ECB, BOE and BOC.

The RBA sees a reduction in risk aversion and an increase in potential growth to push the neutral real interest rate higher. They are also less worried about the downside risks to wage growth.

They see jobs growth as positive and providing a confirmation of the improvement in the labor market. Fiscal policy is seen as more expansionary than they had expected. Infrastructure spending will likely have a significant positive spillover to the rest of the economy.

They also noted the improvement in the global economy with several central banks becoming more positive.

What about the currency? Once again, they warn that a rising A$ could complicate the economic balancing but their other words go in the other direction.

End of Trumpcare?

Reports coming out of the US discuss a failure of the attempt to repeal and replace Obamacare. The health issues of Senator McCain mean that it becomes even harder to pass a revised Senate version of the new bill.

A failure to repeal the Affordable Care Act after 7 years of vows to do so mean a lower chance of passing other topics: tax reform and infrastructure spending.

AUD/USD

We are currently back to levels last seen in early 2017 and basically, 0.80 is the next level. At current levels, Aussie/USD is back to levels last seen in May 2015.

Above 0.80, the next level of resistance is only 0.8165. It is followed by 0.8215 and 0.83. All are levels seen way back in early 2015.

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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