After reaching its daily peak at 0.8007 on greenback weakness, the AUD/USD pair erased a small portion of its daily gains and is now moving calmly at 0.7990, still up 0.25%, or 20 pips, on the day.
Unless the pair makes a sharp drop in the last few hours of the week, it's going to record its highest weekly close in more than two years. Although the aussie felt some selling pressure during mid-week amid disappointing inflation figures and the RBA Governor Philip Lowe's remarks, the greenback weakness dominated the price action and allowed the pair to move above the 0.80 handle for the first time since May of 2015.
In the meantime, the US Dollar Index is looking to close the week at its lowest level in more than 15 months. Following yesterday's technical correction and profit taking, the greenback caught a fresh selling wave in the early NA session on Friday after the soft personal consumption expenditure prices dampened the expectations of a pickup in inflation in the near-term. Despite the robust preliminary 2.6% Q2 GDP growth release, the DXY slumped to 93.15 and is now at 93.25, losing 0.55% on the day.
- US: Real GDP increased at an annual rate of 2.6% in second quarter of 2017
- US: PCE price index increased 0.3 percent in second quarter
Neel Kashkari, a voting member of the FOMC and the president of the Reserve Bank of Minneapolis, will be giving a speech shortly but the reaction could stay limited as the volume is thinning out before the markets wrap up the week.
Technical outlook
The RSI on the daily graph is moving sideways above the 70 handle, suggesting that the pair is still technically overbought. 0.80 (psychological level) could be seen as the initial hurdle ahead of resistance ahead of 0.8065 (Jul. 27 high) and 0.8160 (May 14, 2015, high). On the downside, supports align at 0.7935 (daily low), 0.7875 (Jul. 26 low) and 0.7815 (20-DMA).
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