- A risk-off end to the week which has instigated a technical bearish bias on the charts in AUD/USD.
- The RBA Gov’s speech will take on increased importance.
AUD/USD is stabilising within a bearish set-up on a technical basis while markets seek clarification on the geopolitical front, weighing up prospects for US/Sino trade talk progress. AUD/USD is currently trading between a low of 0.6764 and 0.6781, awaiting the next catalyst.
Last week’s closing session reminded us how susceptible risk assets are to trade headlines with a risk-off end to the week which has instigated a technical bearish bias on the charts in AUD/USD, although fundamentally, it really boils down, for the near term, to how dovish the Reserve Bank of Australia will be at their next meeting around and whether the Federal Reserve can maintain a hawkish bias into the year-end.
Eyes on central banks
In this respect, the RBA Gov’s speech will take on increased importance as it will confirm or knockback market pricing for the Bank to cut the cash rate to 0.75% next month. “We have now brought forward our RBA cut from Nov to Oct in the wake of the Aug employment data. This follows a more dovish set of Sep RBA Minutes and the miss on Q2 GDP,” analysts at ANZ TD Securities argued.
As for the Fed, a slew of Fed officials are on tap this week, with NY Fed President Williams likely to appear open to further accommodation, while voters Evans and Bullard who will make the case for the doves at the FOMC.
AUD/USD levels
On a technical basis, the pair is back below the psychological 0.6800 mark, embarking on run to the August and current September lows at 0.6691/78. “Unexpected failure at 0.6678 on a daily chart closing basis would suggest the resumption of a down trend with the 0.6548 February 1999 high being in focus. We think this unlikely to happen, though, and instead to see further upside near term. Resistance above the 55 day moving average at 0.6847 comes in at the current September high at 0.6894. Further up sits the July 10 low at .6911. Were it to be exceeded, the early June high at 0.7022 would be next in line,” analysts at Commerzbank said.
Share
