Subscribe to receive new analysis by email

Today's article

On the 5th of May when the RBA cut rates by a quarter percent, the AUD/USD rallied. This was against the grain of action that one would have expected. At that time, one could have argued that the resulting play-bounce in the AUD/USD – rather than the expected sell-down due to the cut – may have been due to a ‘buy on news, sell on rumour’ course of action. Further, the short Aussie trade had become overly crowded then with bears expecting the cut by the RBA. Fast forward to today and we have another decision announcement around midday. This time around, the consensus expectation is for the RBA to hold rates unchanged. Going into this meeting, however, AUD has been under pressure for the last few weeks. Its longest down stretch this year – having dropped from near 81.75 toward 0.76 – was registered in the last thirteen days. This ‘round trip’ move on the AUD from 0.76 to 0.81 and then back to 0.76 again over two months clearly sets the strongly defended 0.75-0.76 level to be challenged again. Based on this, it will be interesting to see whether Governor Stevens continues to complain about the dollar being overvalued, and talk it down or not. AUD could be active through the week with GDP and other economic reports on the way as well. Furthermore, with key numbers due from the US later in the week, the influence on this pair may also come from the USD instead. A confident break below the 0.75 level could set stop action and may lead to a resumption of the slide from September. For the time being, key resistance remains at 0.81.
IMPORTANT NOTE AND DISCLAIMERS Market Opinions Any opinion(s), news, research, analyses, prices, or other information contained on this website / document is provided as general market commentary and are from publicly available resources or otherwise obtained, and does not constitute investment advice nor does it seek to market, endorse, recommend or promote any investment or financial product. CMC Markets Singapore Pte Ltd. (Reg No./UEN: 200605050E) (“CMC Markets”) will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Accuracy of Information The content is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. CMC Markets has taken reasonable measures to ensure the accuracy of the information, however, does not guarantee its accuracy, and will not accept liability for any loss or damage. CMC offers no financial advisory services in any of the content or vouch for the veracity of any information. Distribution The content of this publication is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or products referred to or mentioned are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of the reader to ascertain the terms of and comply with any local law or regulation to which they are subject. Third Parties CMC Markets may provide you with opportunities to link to, or otherwise use, sites and services offered through or by third-party(ies). Your use of these third-party services is subject to such terms as posted by these third-party(ies). We have no control over any third-party site or service and we are not responsible for any changes to any third-party service or for the contents thereof, including, without limitation, any links that may be contained in or accessible through such third-party service. These links are provided solely as a convenience to you. You will need to make your own independent judgment regarding your interaction with these third-party sites or services. Our inclusion of advertisements for, or links to, a third-party site or service does not constitute an endorsement of any of the representations, products or services listed therein. Important Note Each reader/recipient agrees and acknowledges that: (a) no express undertaking is given and none can be implied as to the accuracy or completeness of this document; (b) this document does not constitute in any way a solicitation nor incentive to sell or buy any Shares Stock Options and Contracts For Difference (CFDs) and similar and assimilated products; (c) each reader/recipient of this document acknowledges and agrees to the fact that, by its very nature, any investment in Shares, Stock Options, CFDs and similar and assimilated products is characterised by a certain degree of uncertainty; that consequently, any investment of this nature involves risks for which the reader/recipient is solely responsible and liable. It is to be noted that past performance is not necessarily indicative of future results. In this respect, past performance of a financial product do not guarantee any and are not an indication as to future performance; (d) the use and interpretation of this document require financial skill and judgement. Any utilisation whatsoever by the reader/recipient, relating to this document, as well as any decision which the reader/recipient may take regarding a possible purchase or sale of Shares, Stock Options, CFDs and similar and assimilated products, are the sole responsibility and liability of the reader/recipient who acknowledges and agrees to this as a condition precedent to and prior to any access to this document; (e) as a result of the above, all legal liability directly or indirectly arising whatsoever.