PM Malcolm Turnbull, faces the possibility of a second leadership vote within the Liberal party as three ministers deserted him so far. After a leadership vote, and after a calling for a second leadership vote, ministers deserted the PM. Currently parliament has been adjourned, if we see any further escalation we could see the Aussie weakening.
AUD/USD dropped steeply today, breaking the 0.7325 support line. We could see the pair stabilising today… We could see it breaking the 0.7325 resistance line. On the other side, we could see the pair breaking the 0.7265 support line and aim for the 0.7200 support area.
“Delegation will be sent to the US for talks in late August” and “The delegation will be led by Vice commerce minister and meet US team led by Secretary of the Treasury” – its stated in a statement of China’s ministry of commerce. Also, we could see the USD weakening somewhat temporarily.
In other news we could get the UKs Retail Sales growth rates (European morning) and the number of housing starts and the Philly Fed manufacturing index (American session).
AUD/USD broke the downward trend line and tested the 0.7265 (Asian session). We see the case for the pair to start slowly rising as the USD could weaken. We could see the pair breaking the 0.7265 resistance line and aim for the 0.7325 resistance area. On the other side, we could see the pair aiming if not breaking the 0.7200 support line.
As was widely expected RBA remained on hold, keeping interest rates at +1.50%. The accompanying statement had a neutral to dovish tone, keeping the same arguments more or less as in the previous decision. Dovish comments included that wages growth remains low and that headline CPI rate to be lower than earlier expected in 2018, however on the bright side, inflation is forecasted to accelerate more in 2019/20 than what was previously expected. AUD/USD treated the decision as a non-event, as volatility remained low and the pair kept its sideways movement.
AUD/USD continued its sideways movement yesterday, between the 0.7410 resistance level and the 0.7370 support line. As volatility seems to remain low, we maintain our sideways bias for today and the pair could be more USD led. Technically, it would be evident that the RSI indicator in the 4 hour chart remains near the reading of 50, implying a rather indecisive market. Should traders favor AUD long positions, we could see the pair breaking the 0.7410 resistance line and aim for the 0.7440 resistance level. On the flip side, should traders favor AUD short positions we could see the pair breaking the 0.7370 support line and aim for the 0.7345 support area.