Can the AUD/USD Continue to Recover This Week? - Forex News by FX Leaders
Will the RBA Cut Rates?

Can the AUD/USD Continue to Recover This Week?

Posted Monday, January 28, 2019 by
Rowan Crosby • 2 min read

The AUD/USD had a big fall from grace over the past week, before staging a strong recovery. Despite a stronger than anticipated jobs report that saw 21.5K new jobs created for the month, the Aussie tumbled.

The key trigger for the weakness came from a shock rate hike from one of Australia’s leading retail banks, NAB.

NAB increased rates on some of the home loan products, which to the market, suggested that there are already increasing pressures on banks and funding that will see rates rise of their own accord. Which in turn means that the RBA has arguably less room to move on rates.

Experts are suggesting that we could even see a cut in rates in December, which would be very much a change of pace from what we’ve seen from central banks around the world.

The key data point for the AUD/USD this week is CPI. YoY CPI is looking at coming in at 1.7%. Let’s remember that the RBA’s target band is 2-3%, so we are currently really struggling in terms of a number that the RBA would be happy with.

That is also what we saw from the recent sluggish GDP figure. So there is certainly a mounting case for a rate cut, however unlikely that might seem.

Despite the strong rally that we saw on Friday, I’m still concerned about the AUD/USD on a fundamental level. With a number of factors as mentioned, keeping me bearish at the moment.

 

Aussie Outlook

The AUD/USD broke down from the major level at 0.7200 and also the 0.7100 level, before the buyers stepped up sharply on Friday and price rallied back towards the area that we came from.

0.7050 and then 0.7000 are my next two key support levels below, with 0.7200 remaining as key resistance.

0.7300 is R2 and the most recent highs sitting at 0.7400.

AUD/USD
AUD/USD – 240min.
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About the author

Rowan Crosby // Asia-Pacific Analyst
Rowan Crosby is a professional futures trader from Sydney, Australia. Rowan has extensive experience trading commodities, bonds and equity futures in the Asian, European and US markets. Rowan holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.
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