Never miss a story from David Song

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Australian Dollar Talking Points

AUD/USD extends the decline following the Reserve Bank of Australia (RBA) meeting, with the exchange rate now at risk of testing the 2018-low (0.7085) as it carves a fresh series of lower highs & lows.

Image of daily change for major currencies

AUD/USD Rate Eyes 2018-Low as Lower Highs & Lows Emerge

Image of daily change for audusd

The diverging paths for monetary policy may continue to influence AUD/USD as the RBA shows little to no interest to lift the official cash rate (OCR) off of the record-low, and the exchange rate may exhibit a more bearish behavior over the days ahead as Fed officials strike a hawkish tone, with Richmond Fed President Thomas Barkin, a 2018-voting member on the Federal Open Market Committee (FOMC), noting that ‘the gradual path fits that so long as the data fit that.’

It seems as though the FOMC will continue to prepare U.S. households and businesses for a less accommodative stance as the central bank largely achieves its dual mandate for full-employment and price stability, and Chairman Jerome Powell & Co. appear to be on track to deliver another 25bp rate-hike at the next quarterly meeting in December as ‘the Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term.

In turn, expectations for higher U.S. interest rates are likely to keep AUD/USD under pressure as there appears to be little in the way of deterring the FOMC from its hiking-cycle, and recent price action raises the risk for a further decline in the exchange rate as it carves a fresh series of lower highs & lows. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

AUD/USD Daily Chart

Image of audusd daily chart
  • Broader outlook for AUD/USD remains tilted to the downside as the exchange rate continues to track the bearish trends from earlier this year,and the rebound from the 2018-low (0.7085) may continue to unravel following the failed attempt to push back above the 0.7320 (50% expansion) to 0.7340 (61.8% retracement) region.
  • The 0.7090 (78.6% retracement) to 0.7110 (78.6% retracement) area now sits on the radar as it lines up with the 2018-low (0.7085), with a break/close below the Fibonacci overlap opening up the next downside hurdle around 0.7020 (50% expansion).
Image of DailyFX economic calendar

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.