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Thomson Reuters
Jun 24 - 02:36 PM
AUD/USD - COMMENT-AUD/USD Shorts Face Relative RBA, Fed Risks
First appeared on eFXplus on Jun 24 - 12:40 PM

AUD/USD broke above the 21-DMA and set a new 5-day high as risks for shorts increase.
Today's Dallas Fed June manufacturing index fell to -12.1 from -5.3 in May, which bolstered market expectations for Fed cuts.
Rates markets have 25 bps of cuts for July 31 fully priced in and are beginning to factor in 50 bps of cuts FEDWATCH.
U.S. rates markets price in a total of 75 bps of cuts by 2019's end while Australian markets foresee just over 50 bps for the same period RBAWATCH.
The expectations disparity helped tighten Australian-U.S.
yield spreads and lift AUD/USD.
Comments from RBA Governor Lowe overnight also helped boost AUD/USD as he said it is legitimate to question the effectiveness of global monetary easing.
Lowe also said if everyone is easing the effect on exchange rates is offset nS9N21I020.
Lowe's comments could be taken by some investors as a reluctance to cut aggressively, which could underpin AUD/USD.
As it stands now AUD/USD bulls are gaining greater control and technicals highlight that.
RSIs are rising, a monthly doji candle has formed and the 21-DMA lends support.
Tests of the 55-DMA, daily cloud base and June high seem likely.
The 200-DMA will be targeted if June's high breaks.

chart: Click here

Thomson Reuters IFR Research/Market Commentary


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