AUD/USD

AUD/USD has equaled its longest losing streak since August 2019, hammered by deteriorating sentiment towards the outlook for the Chinese economy and investor risk appetite, especially towards big tech. But with signs of stablisation in commodity and US stock futures, the grounds for a squeeze higher are growing.

The build-up of hawkish expectations of the BOJ alongside the Wall Street slide certainly made its mark on AUD/JPY which fell to an 11-week low, stopping just shy of the 101 handle. AUD/USD bears made light work of the 200-day MA.

AUD/USD has reverted to being a G10 FX China proxy, mirroring movements in the Chinese yuan and commodities heavily influenced by perceptions on how the world’s second-largest economy is faring, such as copper, iron ore and crude oil. Sitting on a key support zone, what happens next may determine how it fares in the latter part of the year.

AUD/USD tracked copper prices lower for a sixth day, during its worst day in six weeks. Whilst both markets shows the potential for further losses, these may not be the ideal levels for bears to enter.

I suspect we’ve entered a phase where politically-driven sentiment carries more weight than domestic data for AUD/USD. And with the VIX rising alongside political uncertainty, volatility could favour bears over the coming months as we head towards the US elections.

It has been a turbulent 24 hours for markets with Wall Street indices extending losses, dragging AUD/USD and copper prices lower.

Australian unemployment may have risen, but so did all other key metrics including job growth and the participation rate. And that has likely provided a floor for AUD/USD and AUD/JPY over the near term.

AUD/USD probed a key support level after erasing most of the past six days of gains in just two. And that suggests there could be further downside before bulls step back in. The combination of strong earnings, dovish Fed comments and softer Canadian CPI was enough to push gold and the Dow Jones to record highs, which enjoyed their strongest day's performance in 4 months and 13 months respectively.

AUD/USD is benefitting from speculation about another interest rate hike from the RBA after a higher-than-expected CPI report and strong retail sales figure - see the key levels to watch from here!

Jerome Powell's testimony, RBA head of economics speech and US CPI all have the potential to drive AUD/USD next week. But looking at the strength of the Aussie's breakout, dips may look appealing to bulls.

It’s an old saying in trading but so often very true, helping to eliminate noise to provide a more definitive price signal. You can’t miss that in the weekly AUD/USD chart with a bullish breakout clearly playing out, unless the US jobs report is a stunner.

A softer-than-expected ISM services report was the gift that Fed doves have been waiting for ahead of tomorrow's NFP report. The USD index is now on track for a 3-week reversal pattern below resistance, and AUD/USD has broken out in style.

The AUD/USD forecast took another boost after holding its own well on the back of a hawkish-leaning RBA minutes and hotter-than-expected Australian inflation report last week, after the latest US macro data all pointed to a weakening US economy and boosting the odds of a September Fed rate cut.

Bargain hunting by consumers and signs of a bottoming in housing construction have bolstered the case for the RBA to resume lifting interest rates, sending AUD/USD back towards of the top of its trading range. But whether it can break through may be determined by what happens with the Chinese yuan which continues to weaken against the US dollar.

Concerns that headline employment figures could be lagging a worse picture alongside a lack of updated service inflation figures prompted the RBA to hold rates in June. And that makes the quarterly CPI report in a few weeks all the more important.

The confluence of fundamental events in the coming weeks sets the stage for a potential AUD/USD breakout.

Large speculators flipped to net-short exposure to EUR/USD ahead of the French election. Open interest on CAD futures fell at its fastest pace in nearly one year as the sentiment extreme we warned of plays out. Net-long exposure to AUD/USD futures fell to a 3-year low, and prospects of net-long exposure are now on the horizon with the potential for an RBA hike.