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GBP/AUD is forming a potential bullish continuation pattern, with RBA minutes, Australian unemployment and Bank of England commentary among the catalysts that could spark a breakout.
US yields, dollar strength and fading RBA hike bets have combined to drive AUD/USD to fresh multi-month lows. The macro and technical bias remains bearish, although history suggests parts of the move are now reaching unusually stretched levels.
The RBA delivered the expected 25bp hike, but Bullock’s press conference now looms as the bigger volatility risk for AUD/USD and the ASX 200.
Recent trading sessions have reflected a more neutral tone around the Australian dollar. This can be seen in AUD/USD price action, which has posted moves of roughly 0.2% over the last two sessions without establishing a clear direction. Much of this lack of momentum is linked to expectations surrounding the next policy moves from both the Reserve Bank of Australia (RBA) and the Federal Reserve.
AUD/USD is trading at its highest since early May, with the yen’s continued rally helping soften the dollar and amplify the Aussie’s upside response.
Australian household spending strengthened again in July, adding to inflation and construction data supporting a September RBA hike.
The US dollar moved against its recent macro playbook on Monday. AUD/USD paid the price, although bulls still hold the upper hand.
The RBA kept rates at 4.35% but retained a hawkish bias. AUD/USD now looks to US CPI for direction as traders scale back RBA hike expectations.
A likely RBA hawkish hold and higher energy prices are strengthening the fundamental case for the Australian dollar against European currencies. EUR/AUD and GBP/AUD are in focus as traders assess whether those macro tailwinds translate to fresh downside.
Markets are pricing in a “hawkish hold” with the RBA acknowledging the upside risks to inflation and hinting that the next move will be an increase - see what that might mean for AUD/USD!
