News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Breaking news

Federal Reserve Leaves Interest Rates Unchanged, Maintains Monthly Asset Purchases

Real Time News
  • Fed's Powell: - No sense of panic in regard to inflation - I do not believe wage increases are causing price inflation
  • Fed's Powell: - High inflation prints not "what we were looking for" - Spike in inflation driven solely by supply side shock
  • Fed's Powell: - We expect RRP activity to remain elevated - Repo facilities performing as expected
  • Fed's Powell: - MBS and tapering were brought up by a number of FOMC participants - We will taper both (MBS & Treasuries) at the same time most likely
  • Fed's Powell: - Strong capital requirements are a "must" for banks, especially the largest banks - Capital requirements allow banks to continue to perform during severe downturns
  • The July FOMC press conference is hammering home this point: the labor market mandate is now on equal footing with the inflation mandate (which is atypical); and Powell is now making the case that the labor mandate is *more important* to normalization than the inflation side. https://t.co/saAmTwpTRw
  • Fed's Powell: - Fed has not made a decision on when taper will commence - Variety of opinions with in the Committee on when tapering should begin
  • Fed's Powell: - Transitory means not impacting longer-run inflation patterns - We must be extremely careful when it comes to the inflation mandate
  • Fed's Powell: - Fear of COVID and unemployment benefits are keeping people from working - Such a high vacancy-to-unemployed ratio is rare
  • Fed's Powell: - We are not looking at raising rates, but instead asset purchases - Ideally you would not be raising rates before tapering
AUDUSD Rate Outlook Hinges on Reserve Bank of Australia (RBA) Minutes

AUDUSD Rate Outlook Hinges on Reserve Bank of Australia (RBA) Minutes

David Song, Strategist

Australian Dollar Talking Points

AUDUSD holds a narrow range following the 41.0K expansion in Australia Employment, and the Reserve Bank of Australia (RBA) Minutes may keep the exchange rate afloat should the central bank endorse a wait-and-see for monetary policy.

AUDUSD Rate Outlook Hinges on Reserve Bank of Australia (RBA) Minutes

AUDUSD may attempt to extend the rebound from the yearly-low (0.6677) as fresh data prints coming out of Australia show little indications of a looming recession, and the RBA may adopt a less dovish tone ahead of the next meeting on September 3 as “the central scenario is for the Australian economy to grow by around 2½ per cent over 2019 and 2¾ per cent over 2020.

The RBA Minutes may tame speculation for lower interest rates as the central bank insist that “the Australian economy can sustain lower rates of unemployment,” and Governor Philip Lowe & Co. may show a greater willingness to retain the current policy for the foreseeable future as “the outlook for the global economy remains reasonable.”

Image of RBA interest rate decision

However, the RBA may keep the door open to further insulate the economy as the US and China, Australia’s largest trading partner, struggle to reach a trade deal, and the central bank may reiterate its pledge to “ease monetary policy further if needed” especially as the People’s Bank of China (PBoC) weaken the Yuan reference rate.

It remains to be seen if the US-China dispute will lead to a currency war as the PBOC insists that it “will not engage in competitive devaluation and will not use the exchange rate as a tool to deal with international trade disputes,” but fresh remarks from RBA Assistant GovernorChristopher Kent suggest the central bank will continue to utilize the official cash rate (OCR) to address the downside risks surrounding the region as “financial market prices currently imply that the cash rate is expected to be reduced by a further 25 basis points later this year and then again in the first half of next year.

In turn, the RBA Minutes may produce headwinds for the Australian dollar, with AUDUSD at risk of facing a more bearish fate if the RBA prepares households and businesses for lower interest rates.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

AUD/USD Rate Daily Chart

Image of audusd daily chart
  • Keep in mind, the AUDUSD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.7059), with the exchange rate marking another failed attempt to break/close above the moving average in July.
  • With that said, the broader outlook for AUDUSD remains tilted to the downsideas both price and the Relative Strength Index (RSI) continue to track the bearish formations from late last year.
  • However, the string of failed attempts to close below the Fibonacci overlap around 0.6720 (78.6% expansion) to 0.6730 (100% expansion) raises the risk for a larger rebound especially as the RSI bounces back from oversold territory, with the oscillator now carving a bullish formation.
  • As a result, another move above the 0.6800 (61.8% expansion) handle may spur a more meaningful run at the former-support zone around 0.6850 (78.6% expansion) to 0.6880 (23.6% retracement), with the next area of interest coming in around 0.6910 (38.2% expansion).

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 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES