On the back of the RBA and Governor Lowe turning dovish in his speech yesterday, investment bank UBS has changed their official call on rates to a cut in November.

UBS sees inflation slowing down along with GDP and employment. This is now also what we heard from Morgan Stanley last week, so clearly, the heavy hitters are changing their tune.

In reality, it is often the RBA that is slowest to react to these situations. Things clearly aren’t as good with the Aussie economy as the RBA have been saying and now the wheel is turning.

The likelihood of a cut in rates will keep the pressure on an already weak AUD/USD.

Aussie Outlook

The AUD/USD is testing the major level at 0.7100 after a big break through the 0.7200 level yesterday after Governor Lowe’s speech.

0.7100 is support, but not major support in my book.

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

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