- The RBA Governor considered cutting interest rates at June policy meeting.
- Risk events and trade news could offer near-term direction.
The AUD/USD pair dropped to the day’s low near 0.6890 after Governor of the Reserve Bank of Australia (RBA) favored rate cut in his speech at the Economic Society of Australia Business Lunch, in Brisbane during early Tuesday.
Mr. Lowe also conveyed bearish bias for the labor market and growth data.
The pair recently witnessed pullback as minutes of the RBA’s May 07 minutes failed to include a statement that mentions near-term neutral policy bias by the central bank. The minute statement also emphasized employment data to be a signal for the next policy moves. The latest labor market data from Australia has been negative and indicates a rate-cut from the Aussie central bank even if it avoided the same in its latest minutes.
The Aussie has often being considered as a risk barometer of the market and earlier gained after the US announced some relief to the trading partners of China’s Huawei.
Risk sentiment was further brightened by the US President’s readiness to talk with Iran; though, with threats to the Middle East nation.
The 10-year yield of the US government bond, another indicator of the market’s risk tone, has so far been positive around 2.42% since early Tuesday.
Looking forward, the US monthly existing home sales data for April and developments surrounding the US-China trade deal might offer fresh directives to traders. As per the latest forecasts, the US housing market figure could rise to 5.33 million from 5.21 million prior.
Technical Analysis
Failure to clear 8-week old trend-line resistance, at 0.6940, continue signaling brighter chances for the pair’s run down to 0.6880 and 0.6860 whereas January 2016 low surrounding 0.6830 could please sellers then after.
In a case of sustained break beyond 0.6940, the quote can extend recovery towards 0.7000, 0.7030 and 0.7055 numbers to the north.
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