Australian Dollar Talking Points
AUD/USD[1] may face range-bound conditions as it pares the sharp decline from earlier this week, but recent price action keeps the near-term outlook tilted to the downside as the exchange rate extends the string of lower highs & lows from earlier this week.
AUD/USD Rate Eyes July-Low as Bearish Sequence Takes Shape
With the broader outlook for AUD/USD mired by the threat of a trade war[2] between the U.S. and China, growing tensions between the two regions may continue to drag on the aussie-dollar exchange rate as U.S. Treasury Secretary Steven Mnuchin warns many trade talks with Australia’s largest trading partner have ‘broken down.’
In turn, the Reserve Bank of Australia (RBA) Minutes on tap for the week ahead may continue to highlight a wait-and-see approach for monetary policy as ‘one uncertainty regarding the global outlook stems from the direction of international trade policy in the United States,’ and Governor Philip Lowe & Co. may continue to tame expectations for an imminent rate-hike as ‘the low level of interest rates is continuing to support the Australian economy.’
More of the same from the RBA may do little to shore up aussie-dollar as the central bank appears to be on track to retain the record-low cash rate at the next meeting on August 7, and AUD/USD looks to on course to test the monthly-low (0.7311) especially as retail sentiment sits near recent extremes.
Recent updates to the IG Client Sentiment Report[3] shows the number of traders net-long AUD/USD is 2.9% lower than yesterday and 7.8% lower from last week, while the number of traders net-short is
