AUD/USD continues to show signs of a bottoming, but RBA on high alert

  • AUD/USD bid for now, but for how long?
  • The RBA is likely to be under pressure to ease monetary conditions further.

AUD/USD has made a bottom on a technical basis but it has been fulled by the notion that Chinese authorities can somehow pull their economy out of a bottomless hole by pushing on a rope and that US/Sino trade talks will miraculously save the day next month.

Indeed, the markets are buying the optimism, for now,  and it stands to reason that the AUD is the best performing G10 currency on a 7-day view followed by the New Zealand Dollar and GBP.

"However,  the drop in the value of the AUD this year is likely to be insufficient to put much of a dent in the debate about the need for further policy stimulus in Australia in the months ahead",

analysts at Rabobank argued. 

RBA to ease further - (AUD bearish to 0.65c)

"Currently the Bank is mandated to target CPI inflation between 2% and 3%. The implication is that the RBA is likely to be under pressure to ease monetary conditions further. Given that the rates may soon be approaching a floor, the debate about whether QE could be used in Australia is likely to remain alive despite Lowe’s conclusion that “we risk just pushing up assets prices”. We expect AUD/USD to edge towards the 0.65 area on a 12-month view," the analysts explained. 

AUD/USD levels

Analysts at Commerzbank explained that AUD/USD’s daily chart close above the August 8 high at 0.6821 and that this confirms a bottoming formation:

"Slips should find support above the 0.6736 August 14 low. Major support comes in between the August and current September lows at 0.6691/78. Now unexpected failure at 0.6678 on a daily chart closing basis will suggest ongoing weakness to the 0.6548 February 1999 high."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD tension remains elevated ahead of the Fed

EUR/USD is trading above 1.1050, in a narrow range ahead of the all-important Fed decision. Chair Powell is set to cut rates but signal no further stimulus is on the cards.


GBP/USD extends its falls to 1.2450 amid weak UK inflation, Brexit impasse

GBP/USD has dropped to around 1.2450 as UK headline CPI missed with 1.7% in August. Brexit negotiations remain stuck according to Chief EU negotiator Barnier. The Fed decision is eyed.


USD/JPY holds on to recovery gains above 108.00 ahead of Fed

Not only upbeat trade numbers from Japan but upbeat trade/political headlines also help the USD/JPY pair to remain firm around 108.20 prior to Wednesday’s European session. Focus on FOMC decision.


Gold seesaws around $1,500 with all eyes on FOMC

With the global traders on a wait and see approach ahead of the key event, Gold offers fewer moves while taking rounds to $1,500 during Wednesday’s Asian session. Also supporting the bulls were positive statistics from the US and the Eurozone.

Gold News

Forex Today: Fed set to trigger high volatility, oil falls, altcoins advance

Tension is mounting ahead of the Federal Reserve decision later today. Economists expect a 25 basis point rate cut amid slowing global growth and investment. 

Read more