AUD/USD remains under pressure ahead of RBA, key economic data
James Chen, CMT February 5, 2018 6:39 PM
As the US dollar remained well-supported on Monday in the wake of last Friday’s highly positive US jobs report, and equities continued to trade under heavy pressure on rising interest rate expectations, Australian dollar traders were bracing for the potential impact of a major central bank decision and key economic data to be released on Tuesday in Australia.
The Reserve Bank of Australia will release its cash rate decision and rate statement on Tuesday. While no substantial changes are expected to be made, and the cash rate is expected to remain unchanged at 1.50% as it has since August 2016, the RBA’s tone and outlook will likely have a significant impact on the Australian dollar. This is especially the case given the RBA’s recurring concerns about a strong Australian dollar. Also on Tuesday, Australia’s retail sales data (-0.2% expected) and trade balance figures (0.25B expected), both for December, will be released.
Amid this barrage of key Australian releases, AUD/USD has remained under pressure since its peak slightly more than a week ago above the key 0.8100 level. Since that peak, AUD/USD has fallen sharply back down below the key 0.8000 psychological level as the Australian dollar has pulled back and the US dollar has stabilized within its recent plunge. In the process of its breakdown, AUD/USD has also broken down below a steep uptrend line extending back to the December lows.
If the US dollar manages to remain supported off its long-term lows on rising US interest rate expectations, and the Australian dollar continues to falter amid Tuesday’s RBA decision and Australian economic data, a key downside level to watch is around the 0.7875 support area. Any significant breakdown below that support would extend the AUD/USD breakdown, potentially opening a bearish path towards the 0.7800 and 0.7700 near-term target levels.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.