09:12, 21 May

At Four Month Low Around 0.69 after Federal Election

Despite rallying a little in the last couple of days, the AUDUSD has continued to decline over the last month moving to a four month low around 0.6865 before the recent rally. The key 0.7050 level which ably supported the currency pair and more recently has provided resistance is likely to play a role again should prices return. Despite several attempts, the AUDUSD has been unable to move back above this level as it is now offering resistance and preventing it from returning to its range above 0.7050.
Up until recently the AUDUSD had been frustrating many as it moved very little spending most of its time in the range roughly between 0.7050 and 0.7150. Several weeks ago the AUDUSD crept higher and pushed through the resistance at 0.7150 to reach a six week high near 0.72, however after its recent drop, this seems some distance away.

Back at the end of February, the AUDUSD fell from near 0.72 down to its lowest levels in two months at 0.70 before a healthy rally. For the most part in the last two months, the AUDUSD has traded within a range between 0.7050 and around 0.72, although this has now tightened a little with the resistance around 0.7150 throughout most of March and April. In early February the AUDUSD fell back down to support at 0.7050 after meeting stiff resistance at the key 0.73 level, and is currently trying to rely on support from 0.7050 which has supported the currency pair several times and very well since October 2018.

In the lead up to hitting resistance at 0.73 earlier this year the AUDUSD rallied well to move past the key 0.7150 level and reach a two month high around 0.73 before easing lower. Just prior to the decline, the AUDUSD had done very well to rally from its lowest level in many years below 0.67 back up to above 0.7150 and beyond. The AUDUSD didn’t finish 2018 very well falling strongly throughout December to hit a three year low just below 0.7050 before dropping sharply down to below 0.67 and regaining lost ground just as quickly as it fell.

Recently re-elected Australian Prime Minister Scott Morrison and Treasurer Josh Frydenberg will meet today to discuss the proposed tax cuts and the economy, as the governor of the Reserve Bank of Australia (RBA) prepares to make a major speech on the outlook for Australia. The Liberal Party were returned to government on Saturday, and the party is concerned that they won't be able to get its next round of cuts through parliament by the end of the financial year and ready for 1st July. The RBA’s streak of leaving the official cash rate on hold may be in jeopardy. Earlier last month the RBA kept the official cash rate at a record low of 1.5% however even a few weeks ago, a widely expected cut this year “looks inevitable”, many analysts say. The NAB Bank now expects the central bank to cut rates in both June and August, with a third 25-basis point movement to below one per cent possible in early 2020. "This is likely to be signalled in the May Board minutes and Governor Lowe's speech on Tuesday," NAB said in a note. A disappointing and unexpected uptick in the jobless rate unveiled last week provided further evidence the economy had softened more than the RBA expected, NAB analysts said.