AUD/USD Analysis: bulls in the driver seat ahead of RBA’s Minutes

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.7038

Commodity-linked currencies the most benefited by dollar’s weakness.
RBA Meeting’s Minutes most likely to anticipate more rate cuts ahead.
AUD/USD holding near July’s high at 0.7047, large stops suspected above it.

The AUD/USD pair is heading into the Asian session trading a couple of pips below a daily high of 0.7037. The Aussie reacted to Chinese data released at the beginning of the day, initially falling to 0.7011, after China’s Q2 GDP was confirmed at 6.2% YoY as anticipated, the slowest pace of growth in 27 years. However, the real GDP expanded by 1.6% on a quarterly basis in the second quarter following the previous quarter's 1.4% reading. The country also released Retail Sales, up by 9.8% YoY in June, while Industrial Production in the same period rose by 6.3%, both largely surpassing the market’s expectations. The encouraging headlines were partially offset by the details within the reports that showed that consumption remained soft, while increased infrastructure investment was behind the strong numbers. Exports are no longer driving the economy, but government actions to counteract US trade war.

The RBA will release the Minutes of its latest meeting during the upcoming Asian session. The central bank has signaled that further monetary easing would be applied if necessary, and given most recent weak data, the market is partially anticipating additional cuts in the docket, although those aren’t fully priced in.

AUD/USD short-term technical outlook

The pair is short-term bullish, although technical indicators in the 4 hours chart are giving the first signs of upward exhaustion, as the Momentum diverges from price, although holding near overbought territory, while the RSI turned flat around 70. In the mentioned time frame, the 20 SMA maintains a firm upward slope below the current level and above the larger ones. The pair has a relevant resistance level at 0.7050, where it topped early July, with large stops suspected above the level.

Support levels: 0.6995 0.6950 0.6915

Resistance levels: 0.7050 0.7095 0.7130

View Live Chart for the AUD/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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