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AUD/USD on-guard with key RBA speakers this week and trade deal sentiment

  • AUD/USD is a toss-up between the dovish RBA and positive trade deal headlines.
  • Technical indicators in the mentioned chart have pared their declines.

AUD/USD ended on Friday around where it started the day, around 0.6780 and had ranged between a high of 0.6803 and 0.6780. The US dollar was firm into the close in New York and took out the positives that came from bullish trade deal headlines. 

Financial markets were more buoyed going into the weekend as investors weighed the series of positive manufacturing data as the week drew to a close, indicating to markets that the sluggishness in global manufacturing may have started to peter out. 

US data improves and boosts the dollar

Markit US PMI figures rebounded and bat expectations for November. US Manufacturing PMI climbed from October's 51.3 to 52.2 in November, which was a seven month high and the third successive rise in the index. Meanwhile, the composite and services PMI data also impressed by rising to 51.9 and 51.6 respectively. The data boosted the US dollar which moved higher across the board of major currencies. The DXY ended Friday + 0.31% and cruised through 98 the figure to score a high of 98.31 vs a low of 97.84. 

Conflicting trade deal headlines keep AUD under pressure

Meanwhile, the Aussie has been caught in the crossfire of conflicting news flows around the Sino-American trade negotiations. However, the latest developments are a touch more positive and perhaps that US dollar can give back some ground to allow AUD/USD to penetrate into the slightly more bullish territory at the start of this week – The confluence of the 21-day and 50-day moving averages is located just through 0.68 the figure at 0.6830 as a compelling target for the bulls. President Donald Trump said a 'phase-one deal is 'potentially very close' and if it had not been for positive US data, the Aussie would have surely found some traction on such headlines. 

A case for the downside on dovish RBA

On the other hand, the Aussie will have a hard time of upside conviction in the wake of the latest jobs report which only goes to support speculations that the Reserve Bank of Australia will be back to cutting rates in the months ahead - 'Currently, the OIS curve is displaying a 21% implied probability of a cut in December and a 62% in the following meeting in February," analysts at ING Bank explained, noting  two scheduled RBA speakers next week:

"First, Deputy Governor Debelle will give a speech about the labour market (a hot topic, given recent upward dynamics in unemployment), on Tuesday (Monday night GMT). The following day, Governor Lowe will discuss unconventional monetary policy at a dinner in Sydney," adding, "Market’s high sensitivity to this prospect suggests we may see speculation about more RBA easing mounting next week, which should keep AUD below 0.68, barring any major breakthrough in trade negotiations."

AUD/USD levels

"The AUD/USD pair is bearish according to the daily chart, as selling interest surged on an approach to a bearish 100 DMA, which capped the upside throughout the week," Valeria Bednarik, the Chief analyst at FXStreet explained:

"Technical indicators in the mentioned chart have pared their declines, but remain well into negative territory, in line with further slides ahead. Shorter-term, and according to the 4-hour chart, the risk is also skewed to the downside as a bearish 20 SMA contained advances, while technical indicators hold directionless within negative levels."

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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