Fundamental Overview
Last Thursday, WSJ’s Timiraos published an article which seemed suggesting that a 50 bps cut was still being discussed. The market responded by raising 50 bps cut probabilities to around 40% from 13% before the news.
Nick Timiraos is considered a Fed “insider”, so the market is attentive to all of his pieces concerning potential Fed decisions. Since then, the 50 bps camp got more vocal and the probability for the Fed to cut by 50 bps at the upcoming meeting stands now around 70% with a total of 120 bps of easing by year-end.
This repricing weakened the US Dollar across the board as Treasury yields fell further. Once we are done with the Fed decision though, the focus will switch back to the economic data. In case we start to see better figures, the market might start to pare back the aggressive easing expected in 2025 supporting the greenback in the short-term.
For the RBA, the market sees a 91% probability of no change at the upcoming meeting and a total of 21 bps of easing by year-end. The central bank keeps its fairly hawkish stance as inflation has been slow to return inside the target range and the labour market remains resilient.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD bounced around the 0.6650 level and eventually rallied back above the key 0.67 resistance increasing the bullish momentum. The target for the buyers should now be the 0.68 handle where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the 0.67 handle.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the bullish momentum increase as the price broke above the 0.67 resistance and the trendline as more buyers piled in while the sellers squared their positions. There’s not much else to glean from this timeframe, so we need to zoom in to see some more details.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have an upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on the trendline to position for more upside, while the sellers will look for a break lower to pile in for a drop back into the 0.67 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US Retail Sales and the US Industrial Production data. Tomorrow, we have the FOMC Rate Decision. On Thursday, we get the Australian Labour Market report and the latest US Jobless Claims figures.
