AUD analysis 09.08.2019

The Australian dollar fluctuated in a narrow range sloping in the Asian session to witness the rebound to the third session of the lowest since March 18, 2009 against the US dollar following the testimony of the Reserve Bank of Australia Governor Philip Lowe to the Permanent Economic Committee of the House and disclose the minutes The Australian central bank is on the cusp of economic developments and data expected on Friday by the US economy.

At 02:43 AM GMT, the NZDUSD rose 0.13% to 0.6811 levels compared to the opening levels of 0.6802, after the pair reached its highest level during the session at 0.6817, while the lowest level at 0.6779.

We followed the testimony of RBA Governor Philip Lowe to the House of Representatives in Canberra, in which he noted that the RBA is ready to expand interest rate cuts if needed to support the labor market and stimulate inflation. In quick succession, we believed it was appropriate to wait and assess the consequences of monetary easing.

RBA Governor Lowe said it was reasonable to expect a prolonged period of low interest rates in Australia, saying it was unlikely but likely to move to a minimum level of zero interest rates, adding that he hoped to be able to avoid it. He stated that he would be willing to use exceptional monetary policy if warranted.

This came before we saw the Reserve Bank of Australia released its monetary policy statement hours after the Reserve Bank of Australia's monetary policy makers decided to keep their benchmark short-term interest rates at 1.00% after they were cut by 25 basis points at the previous two lows. Which was expected by market analysts at the time.

In the same context, the monetary policy statement of the Reserve Bank of Australia meeting held on the sixth of this month that monetary policy makers believe that the core inflation rate may reach 1.5% by December, before growth accelerates to 1.75% by the end of Next year to 2% by the middle and end of 2021, amid the indication that near-term risks to economic growth are more to the downside.

On the other hand, investors are awaiting the US economy to reveal the PPI reading, which is a preliminary indicator of inflationary pressures that may reflect the acceleration of growth to 0.2% vs. 0.1% in June, while the core reading of the same indicator may show growth slowed to 0.2%. Against 0.3%, while the annualized reading of the index itself and the core annualized reading of the index may show growth stability at 1.7% and 2.3% respectively.

Technical Analysis

AUDUSD continues to rise to 0.6830, and as we have mentioned in our recent reports, the price needs to hold below this level to keep the bearish scenario valid for the coming period, regularly within the descending channel shown in the chart above, waiting for the bounce to fall towards 0.6700 levels.

Then 0.6625 which represents the main targets of the expected bearish wave.

Expected trading range for today is between 0.6720 support and 0.6850 resistance

Expected trend for today: Bearish.