AUD/USD Stuck Near 0.7006? RBA, Risk Now in Spotlight

Nigel Frith

 

In recent days, the Aussie dollar has struggled to preserve a position much higher than its low point from last month.  At one stage in September, it hit the 0.7006 level in the markets.  Since then, however, it has failed to scale much higher than this – a development that is down, in part, to the global shift back towards the greenback.

The US dollar has been snapped up in recent days in a highly febrile anti-risk atmosphere fuelled by the pandemic-related illness of President Donald Trump and the upcoming US election.  With the Aussie dollar considered one of the world’s premier risk-on currencies, its inability to climb higher was not much of a surprise.  In terms of central banking action, meanwhile, the Reserve Bank of Australia (RBA) shocked the markets this week when it revealed that it would not be going ahead with an interest rate cut.

Markets had expected the RBA to make that move, but it did not transpire when the bank finally met.  Instead, interest rates were kept at their previous level – and some analysts believe that there will be no big move in favour of rate cuts to come.  The Australian government, however, has stepped into the perceived void with some fiscal intervention.  Josh Frydenberg, who serves as Treasurer (a post equivalent to finance minister) in the federal Australian government of the Liberal Party’s Scott Morrison, has released a fresh tweak to the national budget.

He is due to provide personal tax relief of almost AUD$18bn – with more to come in the next few months.  Whether this will be enough to shift the Aussie’s value, however, remains to be seen – especially given the context of global uncertainty caused by the pandemic and American politics.  In terms of technical analysis, one strategist said that the underlying price chart position for the Aussie is actually good – even though it is now way behind the 2020 high of 0.7414.

According to this analyst, indicators suggest that the dip in value was merely a product of a temporary bearish move rather than a full-on reversal.  A wider fundamental analysis may be needed to ascertain the short-term moves that the Aussie might make.  According to the economic calendar, Friday morning is packed with relevant events.  Home loans figures for August will be released from the country at 12:30 am GMT.  This was last recorded at 10.7%.  Data on investment lending for homes in August will be out at 12:30 am GMT.  This was last seen at 3.5%.

There is currently no analyst consensus on which direction either metric will trade in next.  An hour later at 1:30 am GMT, there will be a financial stability review report from the RBA.  This will look at how stable the country’s pandemic-hit financial system currently is, and will assess some potential threats to it going forward.


Nigel Frith

Latest news

The US Coronavirus Bill’s Effect on the Markets, Must Watch – Market Analysis 21/10
Market Analysis 21/10 – if you watch one event this week, watch this. Read more
How Trade Analytics Tools Can Help You to Improved Returns
IG’s roll-out of their Trade Analytics tool has now been running for long enough for the trading community to offer their view on the exciting new service. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2012 Global CFD and FX broker
Number One Broker
Best FOREX BROKER Visit broker
5
#2 Your capital is at risk Founded: 2012 Global Forex Broker
Number One Broker
Best Trading App Visit broker
5
#3 Forex Broker Pepperstone LogoYour capital is at risk Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
4.9
#4 Your capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
BEST CUSTOMER SUPPORT Visit broker
4.9
#5 BlackBull MarketsYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
4.8

    Forex Fraud Certified Brokers

    Exness Small Logo
    Pepperstone
    OctaFX Logo
    IQ Option Logo
    LegacyFX Small Logo
    BlackBull Markets Small Logo
    Plus500 Small Logo
    Forex.com Logo
    XM Logo
    VantageFX Small Logo
    HYCM Logo
    FXTM Logo
    City Index Logo
    ATFX Logo
    skilling logo
    Oanda Small Logo