10:33, 16 July
Pushes up to Resistance at 0.7050 Ahead of RBA Minutes
In the last week the AUDUSD has surged strongly back up to the current key level of 0.7050 as it looks poised to threaten this level again and possibly move higher. Only two weeks ago it tested the level as it reached a seven week high on the back of a steady climb higher over three weeks as it moved from support at 0.6850. This level has helped prop up the currency pair twice in the last two months.
This was a solid reversal from the week prior which saw it drop sharply to its lowest levels for 2019 pushing through any support around 0.6850 for a short period of time. If the resistance at 0.7050 stands firm and repels prices yet again, then the AUDUSD will continue to be content to trade within the range between 0.6850 and 0.7050.
Despite several attempts, the AUDUSD has been unable to move back above the 0.7050 level as it is now offering resistance and preventing it from returning to its range above 0.7050. In mid-April, the AUDUSD crept higher and pushed through the resistance at 0.7150 to reach a six week high near 0.72, however it then fell sharply over the next four weeks down to the four month low.
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. Throughout most of March and April the AUDUSD traded within a range between 0.7050 and around 0.72, although this tightened a little with the resistance around 0.7150. The 0.7050 level remains key as it supported the currency pair several times and very well since October 2018.
Earlier this month the Reserve Bank of Australia (RBA) delivered the first back-to-back interest rate cut since 2012 today and set a new record low cash rate of 1% as it continues to try and ignite economic growth. RBA Governor Philip Lowe had been hinting about the need for further cuts, given April's increase in the unemployment rate to 5.2%, suggesting a single cut in June would not be sufficient to reduce spare capacity in the labour market. The minutes from their July board meeting which were released today, showed the central bank was ready to adjust interest rates if required. “The Board would continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time,” the minutes showed. “Lower interest rates would provide more Australians with jobs and assist with achieving more assured progress towards the inflation target.”