AUD/USD hasn’t been able to return to its pre-retail sales data level of 0.7715 and probed as low as 0.7627 on Tue after the slightly more wary RBA statement, points out Sean Callow, Research Analyst at Westpac.
“Market pricing for an RBA rate hike doesn’t rise above a cumulative 50% until Aug 2018.”
“But it’s one thing to trim pricing for RBA tightening in 2018, another to get serious about a rate cut – the latter has not happened and remains very unlikely even after the soft Q3 CPI and this week’s reweighting.”
“Indeed AUD/USD support at the 4 month lows of 0.7625/30 has looked very solid this week. It should hold near term so long as global risk appetite remains upbeat and the US 10 Treasury yield doesn’t make another surge through 2.40%. But probes above 0.7700/20 seem likely to be sustained only if the US dollar comes under broad pressure or commodities turn from recent consolidation to sharp deterioration.”
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