Fundamental Overview
The USD remains weak across the board as market participants now await the key US data releases with the government shutdown expected to end this week. Yesterday, we saw some more weakness following soft weekly ADP data that showed job losses in the second half of October.
The initial weakness didn’t hold though as the US dollar eventually regained some ground. It seems like the market is now just waiting for the government data to confirm the weakness and the December cut. In fact, the market pricing is still standing around 64% probability for a December cut.
On the AUD side, the commodity currency has been supported by the US-China deal and the more hawkish RBA following the very hot Australian quarterly CPI which erased all the rate cut bets as traders expected the central bank to keep rates steady for a more sustained time.
Tomorrow, we have the Australian employment report but it’s unlikely to change anything for the RBA if it comes out good as it would just reinforce the RBA’s patient stance. Conversely, if we get bad data, we might see the market bringing forward the rate cut bets and weigh a bit on the AUD.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD broke above the key 0.6520 level opening the door for a rally into the 0.6627 level next. The buyers piled in on the break targeting the 0.6627 level, while the sellers will want to wait for the price to fall back below the 0.6520 level to position for a drop back into the 0.6440 level next.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the break and the consolidation above the 0.6520 level. This morning, we are seeing some more USD weakness, which should keep the buyers in charge into the 0.6575 level.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is breaking above the upper bound of the recent consolidation. We can expect the buyers to increase the bullish bets into the 0.6575 level as long as the price stays above the upper bound. The sellers, on the other hand, will want to see the price falling back below the upper bound to fade the move into the 0.6520 level. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the Australian employment report.
