AUD/USD Rate Rebound Fizzles Amid Turnbull Turmoil

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Australian Dollar Talking Points

AUD/USD provides again the rebound this month as Australia Prime Minister Malcolm Turnbull struggles to secure his seat, and the change fee seems to be on monitor to check the August-low (0.7203) because it snaps the sequence of upper highs & lows carried over from earlier this week.

Image of daily change for major currencies

Bearish AUD/USD Trends Remain in Play Amid Turnbull Turmoil

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The current backlash towards Mr. Turnbull seems to be dragging on the Australian dollar because it has the potential to change the financial coverage outlook, and a change in management could hold AUD/USD underneath stress because it encourages the Reserve Bank of Australia (RBA) to additional help the actual financial system.

Image of rba cash rate

The RBA Minutes recommend the central financial institution will hold the official money fee (OCR) on maintain on the subsequent assembly on September 4 as ‘there was no robust case for a near-term adjustment in financial coverage,’ and Governor Philip Lowe & Co. could follow the sidelines all through the rest of the yr as ‘the course of worldwide commerce coverage within the United States continued to be a supply of uncertainty for the worldwide outlook.

With that stated, the uncertainty surrounding the fiscal outlook could proceed to rattle the Australian greenback, and the broader outlook for AUD/USD stays tilted to the draw back because the change fee fails to retain the summer time vary, with the Relative Strength Index (RSI) additionally reinforcing a bearish outlook because it extends the downward pattern from earlier this yr. Sign up and join DailyFX Currency Analyst David Song LIVE for a possibility to talk about potential commerce setups.

AUD/USD Daily Chart

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  • AUD/USD seems to have marked a failed run on the July-high (0.7484), with the dearth of momentum to clear the 0.7400 (38.2% growth) deal with elevating the danger for a run on the monthly-low (0.7203).
  • Need a break/shut beneath the 0.7180 (61.8% retracement) to 0.7230 (61.8% growth) area to deliver the draw back targets on the radar, with the following hurdle coming in round 0.7090 (78.6% retracement) to 0.7110 (78.6% retracement).

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— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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