The AUD Looks to Lowe
The AUD has been on the slide in recent weeks, hurt by both uncertainties around trade and also some monetary policy worries from the RBA.
Last week, we heard via the RBA minutes, that the board was very close to acting on another rate cut. They didn’t, but at the time the odds of a cut were around the 5% mark.
So the news really did take the market by surprise. Since the release of the minutes, the AUD/USD has weakened. Price previously was unable to rally through 0.6900, which was strong resistance and there was clear selling pressure.
Then during the week, we saw price break down through 0.6800. At the moment, we are seeing the lows coming into focus very clearly.
There is a very strong chance of a test and break of the 0.6770 range, which would be very bearish and could really bring in more selling pressure. The downside target would then become 0.6700.
That really all appears to be hanging on the words of one man – Governor Lowe.
Lowe will be speaking on Tuesday, on a speech about wages and employment. Of course, the RBA has been targeting employment as a key metric and so far their policies haven’t really seen much improvement.
What is next in-store, is really what the market wants to hear now. If he remains dovish, then I suspect the bottom of that range to break down.
If he is a little more upbeat, I think price will find its way back to 0.6800. But I am on the bearish side of the fence at the moment. However, we do have to assume, there is a fear bit of dovish news priced in.
So I will be waiting and watching that level closely this week, along with Lowe and any news on the US-China trade deal.

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