08:47, 04 December

Jumps to Four Month High Near 0.74 on Trade Ceasefire

The AUDUSD has received a surprise boost to start the week pushing it up to its highest levels in four months just shy of 0.74. It has eased a little since then however it does have the key 0.73 level just below which will quite likely provide the AUDUSD some support should it continue to decline further. To finish last week the AUDUSD spent a couple of days resting on top of the 0.73 level and having felt so much resistance from there previously, it remains a significant level. The AUDUSD has made some solid ground over the last few weeks reversing from support at 0.7050 and moving up to the four month high to start this week. It appears the 0.73 level is starting to play a role as several times now over the last few months there has been selling pressure from around this level repelling prices lower.

Just prior to its recent push higher the AUDUSD had been quite content to take a breather and enjoy solid support from 0.7050 as it has traded along that level for several weeks throughout October, although it did drop a little lower reaching a 2½ year low several weeks ago. The 0.7150 level has also played a role in the last couple of months as it has bounced off this level several times, and may be called upon again should the AUDUSD continue to decline. Throughout June and July the AUDUSD had been quite content to trade around 0.74 and it previously made a few attempts to break through the resistance at 0.75 however all of these were thwarted.

Generally throughout the last couple of years the AUDUSD has traded within reasonably tight ranges of up to six cents, and in the last nine months or so we have seen it push higher to its highest levels in more than two years above 80 US cents. The 80 cents level however has provided a significant obstacle to the AUDUSD as it has met resistance there since the middle of 2017. Repeated attempts to push through the key 80 cents level were short lived and the AUDUSD quickly sold off moving it lower down to its current levels.

The US dollar has been sold off strongly after the United States and China agreed to hold off on fresh trade tariffs for 90 days.During their meeting at the G20 summit in Argentina, the U.S. and Chinese presidents, agreed to not impose additional trade tariffs for at least 90 days while they hold talks to resolve existing disputes.This was following last week's surprisingly dovish comments coming from U.S. Federal Reserve Chairman Jerome Powell.Back in Australia, economists are widely expecting the Reserve Bank of Australia (RBA) to keep the official cash rate at its record low 1.5% at their December meeting on Tuesday, which will be for an incredible 28th consecutive meeting.The rate was last cut in August 2016 and hasn't been increased since November 2010.The rate reflects what the central bank charges commercial banks on overnight loans and influences all other interest rates, and the RBA has made it clear that the rate is not likely to change for some time.However RBA Governor Philip Lowe says a change will come eventually, as unemployment continues to drop and inflation is kept in line with the authority's targets."If the economy continues to move along the expected path, then at some point it will be appropriate to raise interest rates," he said.“This will be in the context of an improving economy and stronger growth in household incomes."