- AUD/USD finds resistance at the top of the descending hourly channel.
- RBA minutes leave the door open to further easing and today's jobs data will be in focus.
AUD/USD has been trapped below the trend-line resistance on an hourly basis for the second bullish attempt since the 11th August highs and is currently consolidating the recent rally finding support in the 200-hour moving average.
AUD/USD trades at 0.6761 having travelled between 0.6723 and 0.6765, a touch higher on the day, up by +0.11% at the time of writing. The markets are supportive of risk-on FX, such as the AUD, and although the recent RBA October minutes left the door open to further easing, there was no sense of urgency to act from the central bank and that too has given some fresh air to the bulls this week – In fact, the minutes also mentioned arguments against cutting rates which makes the case for a wait-and-see bias at the next meeting around should various geopolitical risks continue to find traction, so long as the Aussie economy performs satisfactorily.
Westpac analysts believe the RBA will cut the cash rate again, most likely in February 2020 after a short pause. "Debate over the need for further monetary policy easing will then likely ensue," they argued. Meanwhile, markets continue to price 10bp of easing at the 5 November RBA meeting, along with a terminal rate of 0.42% (RBA cash rate currently at 0.75%), according to the analysts at Westpac.
Where do trade talks between the Chinese and US go from here?
Elsewhere, it's really a matter of where trade talks between the Chinese and US go from here. At this juncture, things are not quite as rosy as they appeared to be when Trump made the initial announcements of a 'Phase-1' deal in the making. Indeed, there is uncertainty persisting over China’s promise to purchase more U.S. farm products. The Wall Street Journal reported that during trade talks last week, President Trump said China agreed to purchase about $40 billion to $50 billion worth of U.S. agricultural products “in less than two years.”
However, China has still not confirmed a time frame or a figure amount for the purchases, just as one example of the kind of matters that need to be resolved and clarified before such a deal can go to 'ink'.
Meanwhile, for the day ahead, its Aussie jobs data time with the Employment Report scheduled for release in the Asian session. "Even if Sep job numbers are soft on Thursday, there is nothing to suggest the RBA is likely to cut as early as next month," analysts at TD Securities argued. However, the data will surely be an event to monitor and could offer some price action one way or another.
AUD/USD levels
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