AUD/USD is down 0.6% on the day to 0.6645 and it is mostly to do with the monthly inflation numbers here. That might be reason for the RBA to switch the dial on policy setting but it isn’t definitive I would say. Inflation remains well above the target band set out by the central bank and there are growing worries over its persistence, something which we are seeing in the UK especially.
AUD/USD daily chart
What’s troubling for the aussie at the moment is that the technicals are also corroborating with the latest downside momentum. There was a brief reprieve yesterday, after China intervened to prop up the yuan, but that wasn’t enough for AUD/USD to hold a daily close above its 100 (red line) and 200-day (blue line) moving averages.
In fact, the close below both key levels keeps sellers in prime position and they are pushing the agenda further today. The 61.8 Fib retracement level of the swing higher earlier this month is holding the drop for now, seen at 0.6626 roughly. Still, AUD/USD is up by a little over 2% in June trading. Doesn’t feel like it, no?
Well, now all eyes are turning to the RBA and whether or not they will raise the cash rate again next week.
There is good reason to keep at it but the latest data today presents a bit of a curveball and something to work with for those on the other side of the argument. And the thing about the RBA these days is that they tend to deliver rather unorthodox and surprising decisions. That makes it a rather dicey to say with much certainty on what may come next Tuesday.