The Australian economic calendar was void of event risk with only the tier two indicators of New Home sales and Conference board leading index. That would leave price action to the broader dollar sentiment and macro themes. The week’s choppy price action would have the pair bounce support at 0.8500 reaching as high as 0.8695 before giving back most of the gains to end the week.
Australian Dollar Could Freefall Following Rate Decision
Fundamental Outlook For Australian Dollar: Bearish
- Conference Board Leading Index Falls Another 0.5% - HIA New Home Sales Fall 7.2% As High Credit Costs Discourage Buyers
The Australian dollar will be subject to a plethora of event risk in the week ahead as a rate decision, GDP, manufacturing and inflation data dot the calendar. The expected 25bps cut which was forecasted by RBA Governor Stevens when he commented that the board saw “scope” to move towards a less restrictive policy. The manufacturing and inflation data before hand may tip the boards hand. An uptick in prices may signal that the central bank may be one and done which could lead to an appreciation in the Australian dollar. However, if the MPC hints at a series of rate cuts then we could see the AUDUSD fall considerably since beyond 0.8500 lies little support until the 0.8100 price level. Conversely, if the MPC expresses lingering concerns regarding inflation and the service and growth numbers that follow print better than expected, we could see a sizeable retracement as only the 20 Day SMA will provide resistance before the 0.9000 price level at 0.8789. -JR