AUD/USD is down 0.6% on the day at 0.6645 and it’s mostly about the monthly inflation numbers here. This could be a reason for the RBA to switch policy position but it is not final in my opinion. Inflation remains well above the target range set by the central bank and there are growing concerns about it continuing, something we are seeing in the UK in particular.
Daily chart of the Australian dollar / US dollar
What is troubling the Aussie at the moment is that technicals are also supporting the recent bearish momentum. There was a short reprieve yesterday, after China stepped in to support the yuan, but it was not enough for the AUD/USD pair to close above the 100 (red line) and 200 (blue line) daily moving averages.
In fact, closing below both key levels is keeping sellers in a prime position as they push the agenda further today. The 61.8 Fibonacci retracement level of the swing higher earlier this month is holding the decline for the time being, which was seen at approximately 0.6626. However, the Australian dollar rose against the US dollar by just over 2% in June trading. I don’t feel like it, right?
Well, all eyes are now on the Reserve Bank of Australia and whether or not they will raise interest rates again next week.
There’s good reason to hold it, but today’s latest data offers a bit of a curveball and something to work with for those on the other side of the argument. The thing about the RBA these days is that they tend to make decisions that are somewhat unconventional and surprising. This makes it suspicious to say with a great deal of certainty what might come next Tuesday.