AUD Back Under Pressure
The Australian Dollar has come back under heavy selling pressure this week as a result of news of the fresh lockdowns in place there. With the Delta variant spreading, the Australian government has placed four key cities under fresh lockdowns, imposing stay at home restrictions on around 12 million citizens. Given the country having bene one of the more effective in handling the initial outbreaks of the virus, the news is disappointing for citizens and AUD bulls alike and has caused a shift in expectations ahead of next week’s RBA meeting.
RBA Views 2024 Lift Off
The tone of recent RBA meetings has been decidedly optimistic. While the bank itself has stuck to the view that rates will remain on hold until at least 2024, the netter jobs data seen recently had caused a lift in market expectations with some players forecasting a lift as early as next year. However, news of the fresh lockdowns this week is a strong reminder of the residual downside risks and heightened uncertainty the RBA has continued to highlight within its outlook.
RBA To Highlight Remaining Risks
Given the latest developments there, the upcoming RBA meeting is likely to see the bank refraining from any hawkish signals. While the bank’s message is likely to reiterate the need to be vigilant and to continue with the easing program currently in place. The weight of the RBA’s message around the lockdowns will be key to how AUDUSD reacts. Given that AUD has been one of the weakest performers since the FOMC, a more severe message of warning from the RBA next week will likely keep AUDUSD on a downward path over the medium term. Given the move in rates markets that have occurred since the better employment data released this month, some push-back from the RBA here is likely to be a heavy selling catalyst for AUD.
Technical Views
AUDUSD
The sell off in AUDUSD as per the Market Spotlight trade, is continuing towards the .7413 target. Price has recently turned back under the .7564 level and with RSI and MACD both negative, the focus is firmly on a continuation lower for now.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.