AUD/USD moves closer towards a test of the 200-day moving average
A bit of an extension to the daily range to start the day, as we see the greenback creep a little higher against most major currencies - notably the euro, pound, aussie and kiwi.
In particular, AUD/USD fell to a low of 0.6905 as price now closes in on a test of the 200-day MA (blue line) @ 0.6897. If sellers manage a break below that, the bias in the pair will turn from being more bullish to being more neutral.
The aussie has had a good run in late December amid thin liquidity conditions but as we return back to reality, the focus of the RBA is what will keep aussie gains at bay for now.
Cash rate futures are now indicating a 54.5% probability of the RBA cutting rates by 25 bps in February, up from ~38% seen in late December. Given that there is still room to price in further pessimism, downside risks for the aussie will still be present in the weeks ahead.
And with the technical picture starting to look more fragile, sellers may be more vindicated to drive price lower if economic data follows suit as well. Looking ahead this week, we'll have trade balance data on Thursday and then retail sales data on Friday.
