Rate cut later is 80% priced in
AUD/USD is getting pulled in a few different directions today. The early move higher was all about better global growth and that sent AUD/USD to the best levels since May 6.
However the theme has now shifted to USD-strength because of a belief the Fed won't cut as much. Meanwhile, the RBA is a few hours away from lowering rates for the second time.
It's led to an outside bearish reversal in AUD/USD. It comes just after climbing above the June 5 high.
This could be setting up for a return to the lows but I think it's too early to jump in. If you assume an RBA cut (I do), then it comes down to how dovish you think they will be. I imagine they have to be feeling a bit more upbeat after the US-China truce. The could lead to a more-neutral statement and that's something that would spark another reversal.
