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Australian Dollar Latest: AUD/USD Slumps on RBA, Taiwan

Australian Dollar Latest: AUD/USD Slumps on RBA, Taiwan

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AUD/USD Rate Analysis and Talking Points

AUD Forecast
AUD Forecast
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AUD/USD Slumps On Dovish Hike

The Australian Dollar is underperforming this morning, despite the RBA hiking rates by 50bps for a third consecutive meeting to take the cash rate to 1.85%. The key factor behind the slump in the Aussie had been the RBA’s statement, in which the central bank stated that rate hikes are not on a pre-set path and thus adding optionality as to the size of the next rate hike. As such, money markets have repriced lower the probability of a 50bps hike at the next meeting, from 70% to 25%.

Consequently, the Australian Dollar is on course for its largest intra-day drop in a month, falling 1.5%. What’s more, softer risk sentiment has also weighed on the risk-sensitive currency as traders digest China’s tough talk in relation to Nancy Pelosi’s planned trip to Taiwan. This morning, the Global Times Editor, Hu Xijin, tweeted that Beijing has formulated a series of countermeasures, including military action. That said, in times of rising geopolitical tensions, particularly between China and the US, it is useful to understand how Twitter can provide a time advantage for traders. For more on how to use Twitter for traders, click on the link below.

How To Use Twitter For Traders

AUD/USD Posting Worst Performance In A Month

Source: Refinitiv

Elsewhere, a chart I flagged up previously regarding AUD/NZD, appears to be closing the gap.

AUD/NZD Closes the Rates Gap

Source: Refinitiv

S&P 500: Equities are slightly softer to begin the session following the aforementioned US-China tensions over Taiwan. I remain of the view that the strong July performance was merely a bear-market rally and would looking to fade gains around resistance of 4180-4200. At the same time, the RSI recently dip above overbought territory, which suggests to me that further gains will be harder to come by.

US 500 Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 4% -3% -1%
Weekly 2% 0% 1%
What does it mean for price action?
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S&P 500 Chart: Daily Time Frame

Source: IG

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