|

AUD/USD plummets to near 0.6700 as RBA Lowe advocates slower pace for rate hikes ahead

  • AUD/USD has slipped sharply to near 0.6700 as RBA Lowe trims its hawkish stance on rate guidance.
  • RBA Lowe cited that consumer spending is showing resilience after remaining vulnerable.
  • A hawkish stance is expected from Fed Powell on interest rate guidance ahead.

The AUD/USD pair has plunged to near 0.6700 after surrendering the critical support of 0.6734. The asset has witnessed a vertical drop as Reserve Bank of Australia (RBA) Governor Philip Lowe has favored for slow down the pace of hiking the Official Cash Rate (OCR). Also, the RBA policymaker sees resilience in consumer spending after remaining lower due to the higher inflation rate.

On Tuesday, the RBA announced a fourth consecutive 50 basis points (bps) rate hike and elevated the Official Cash Rate (OCR) to 2.85%. Apart from that, RBA Lowe cited that the central bank sees interest rates at 3.85% and the inflation rate will top around 7%.

In the early Tokyo session, the asset witnessed a steep fall after the release of the Australian trade data. The commodity-linked currency reported a decline in monthly export data by 9.9% against an expansion of 5.1%. Also, imports have accelerated by 5.2% vs. 0.7% the prior release. The Trade Balance has trimmed dramatically to 8,733M against the expectation of 14,500M. It is worth noting that the Australian economy is highly sensitive to external trade data and a significant decline in the same is critical for the aussie bulls.

Meanwhile, the US dollar index (DXY) has turned sideways after a rebound move to near 109.60. The asset is expected to continue its lackluster movement further as investors are awaiting the speech from Federal Reserve (Fed) chair Jerome Powell. As the price rise index is highly deviated from the desired rate, Fed Powell will continue its ‘hawkish’ stance on interest rates guidance. Apart from that, a third consecutive rate hike by 75 bps could be discussed for September monetary policy meeting.

AUD/USD

Overview
Today last price0.6848
Today Daily Change0.0079
Today Daily Change %1.17
Today daily open0.6769
 
Trends
Daily SMA200.6905
Daily SMA500.6898
Daily SMA1000.698
Daily SMA2000.7119
 
Levels
Previous Daily High0.6771
Previous Daily Low0.6699
Previous Weekly High0.7074
Previous Weekly Low0.6771
Previous Monthly High0.7137
Previous Monthly Low0.6835
Daily Fibonacci 38.2%0.6743
Daily Fibonacci 61.8%0.6726
Daily Pivot Point S10.6722
Daily Pivot Point S20.6674
Daily Pivot Point S30.665
Daily Pivot Point R10.6794
Daily Pivot Point R20.6819
Daily Pivot Point R30.6866

Author

Sagar Dua

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

More from Sagar Dua
Share:

Editor's Picks

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold remains vulnerable, targets $4,100

Gold retreats for the fourth consecutive day on Monday, targeting the key $4,100 mark per troy ounce. The precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation
Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."
The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.