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Hawkish RBA Meeting
The Australian Dollar is testing the 2024 highs today on the back of the latest RBA meeting overnight. The central bank held rates unchanged and reaffirmed its commitment to maintaining or hiking rates as necessary in order to curb elevated inflation. The meeting was viewed as a ‘hawkish hold’ by traders and pits the RBA against the majority of the G10 central banks which have begun easing rates. Indeed, with the Fed recently announcing a half point interest rate reduction and signalling further easing to come, there is highly tradable divergence between it and the RBA, keeping AUDUSD supported here.
Commodities Boost
Along with the boost from the RBA meeting, the Aussie is also deriving support from a broad lift in commodities prices today on the back of the Chinese stimulus announced overnight. A huge suite of measures announced by the PBoC has seen copper and iron ore prices climbing firmly today, good news for Aussie export income. While this dynamic continues to play out, Aussie looks poised for further gains here as the US Dollar weakens.
US Data on Watch
Looking ahead today and through the remainder of the week, focus will be on the continued market reaction to Chinese stimulus as well as incoming US data. Any further US data weakness is likely to amplify near-term Fed easing expectations which should keep USD pressured allowing AUDUSD room to breakout.
Technical Views
AUDUSD
The rally in the Aussie has stalled for now into a test of the .6857 YTD highs. With momentum studies bullish, however, focus is on an eventual break higher while we hold above .6681. Above, .6994 is the next bull objective. Notably, in the Signal Centre today we have a buy limit set at .6805 suggesting a preference to buy into the pullback from highs, targeting a fresh move higher.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.