The 0.6850 level was expected to provide some support however this level failed to deliver. It wouldn’t have surprised many that it did fall back below 0.6850 and it will now be looking for support at 0.6750.
The AUDUSD has also been well supported by 0.6750 even though it has fallen through this level on three occasions in the last few months. Towards the end of July, the AUDUSD suffered strong falls which sent it down to its trading range around 0.6750, which is generally where it has settled in the months since. Just prior to this fall, the AUDUSD had surged strongly back up to the key level of 0.7050 as it then looked poised to threaten this level and possibly move higher, however these levels now seem some distance away.
In the middle of June it did drop sharply to its then lowest levels for 2019 pushing through any support around 0.6850 for a short period of time before being bought up again. For the last three months, the AUDUSD has seemed content to trade within the range between 0.67 and 0.69, and is not showing any signs of breaking out of this range any time soon. Despite several attempts, the AUDUSD has been unable to move back above the 0.7050 level as it is now offering resistance and preventing it from returning to its range above 0.7050.
At its Melbourne Cup Day meeting earlier this month, the Reserve Bank of Australia (RBA) left the official cash rate at 0.75%, after cutting the rate another 25 basis points last month down to the historic low. In his post meeting statement, the RBA Governor Philip Lowe said the risks remained towards the downside, even though the outlook for the global economy remains reasonable. “The US – China trade and technology disputes continue to affect international trade flows and investment as businesses scale back spending plans because of the uncertainty,” he said. “Interest rates are very low around the world and a number of central banks have eased monetary policy in response to the persistent downside risks and subdued inflation. Expectations of further monetary easing have generally been scaled back over the past month and financial market sentiment has improved a little.” He added that the outlook for the Australian economy remains unchanged. “The central scenario is for the Australian economy to grow by around 2¼ per cent this year and then for growth gradually to pick up to around 3 per cent in 2021”, Governor Lowe said. “The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices in some markets and a brighter outlook for the resources sector should all support growth.”
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