AUD/USD: bearish bias persists ahead of Jackson Hole, bulls to commit to the 0.79 handle?

Currently, AUD/USD is trading at 0.7913, up 0.02% on the day, having posted a daily high at 0.7920 and low at 0.7908.

AUD/USD is currently stable at the lower end of the 0.79 handle, in a minor recovery of the supply from 0.7950. Metals are supporting an arguably over stretched Aussie in an environment where the greenback is making a come back on rumours over Trump's team making positive movements on tax reform legislation in the Whitehouse behind the scenes and despite the recent negative political headlines. However, the demand for higher beta and the carry was not sustained overnight and the antipodeans closed in the red. Should Trump continue to move more front and centre, (i.e. Bannon recently fired and moves in Afghanistan), in his Republican cap, then the tax reform trade could become dominant in weeks ahead and the antipodeans may continue to suffer. 

Forex today: better risk tone, stocks, dollar and rates all up on the session, higher beta not sustained

Analysts at Westpac argued that last night’s reversal in AUD puts it on a neutral footing today, between 0.7900 and 0.7950. Meanwhile, there are no events scheduled domestically that would affect the Aussie and all eyes are on the Jackson Hole at the end of this week and any immediate data releases from the US. However, whether traders will be prepared to take much on ahead of the main event at the end of the week is questionable and one might expect ranges to remain narrow.

AUD/USD 1-3 month: 

Longer term, the same analysts suggested that if the RBA remains firmly on hold, as we expect, and the US dollar rises on tighter Fed policy, then AUD/USD could fall to 0.76 by year end, a view held since  9th Aug.

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the price settled a few pips below a horizontal 20 SMA, whilst technical indicators head lower, but within neutral territory. "The pair has scope to extend its decline only on a break below 0.7869, Friday's low, although given market's negative sentiment towards the greenback, a bearish movement is not expected to extend beyond 0.7807, this month low."