AUD/USD: recovery in the balance of the 10 and 21-D SMAs

While there has been a correction in the CRB index, it remains vulnerable to contagion risk noise despite sentiment shifting around Turkey's currency crisis given that such counterpart nations in the EMs, as say, South Africa whose currency has taken a beating of late, do not hold the same problematic economic traits as Turkey does, such as its large external financing requirement, poor relationship with the US, and where the independence of the nation's central bank has been curtailed by the nation's leadership. In fact, for the majority of the EM countries, inflation tends to be at reasonable levels and they have reduced their external deficits and some of which have turned positive and into a surplus. 

Meanwhile, there has been a bounce in commodity prices where metals are on the up again on news that China intends to increase its infrastructure spending - copper extended the recovery and gold futures settled almost 1% higher overnight - all helping the Aussie close on another positive note for a third day after finding channel support last week. 

RBA minutes expected to be a non-event

For the day ahead, eyes will peer over at the RBA minutes but we have really been overloaded with the RBA of late and it is highly unlikely that we will get anything fresh to work with. These minutes will come from the August meeting that was held before the quarterly Statement on Monetary Policy and semi-annual testimony on monetary policy to Parliament and the annual RBA Anika speech, so, again, unlikely to be an event. Instead, markets will look towards the end of the week where low-level China/US trade talks are scheduled to start to take place again. The FOMC minutes and Jackson Hole will also take place as potential market moving events over the same dates. Indeed, traders will be listening out for discussions based around the strength of the dollar at the Jackson Hole. 

AUD/USD levels

The August 14th doji was a bullish signal that has come to fruition with the price correcting there and extending to current highs. However, AUD/USD is bearish on the wider readings with the price continuing lower within down through the weekly channel and only a sustained break above the 10-D SMA and the 21-D SMA could alleviate the near term bearish pressure with 0.7480 being the primary target above the sideways bearish continuation channel. On the flipside, 0.7110/60 is on the bear's map while a complete breakdown to 0.7150 opens the floodgates for lower grounds in the 0.69 handle.