AUD/USD is back under the 100-day MA after more than a week
It’s a bit of a triple whammy for the aussie today as negative risk tones across markets is already pinning down commodity currencies but then trade balance data earlier in the day was also softer. Now, add to the fact that RBA’s Debelle is sending a dovish message on rate cuts, it’s not making for a good sign in European trading so far.
Debelle’s comments sent AUD/USD to a low of 0.7212 but the more important level for the pair today is that 100-day MA (red line) @ 0.7239. Hold a break below it and the bias in the pair turns more bearish and will favour sellers once again.
There is some support from the 15 August low @ 0.7203 but a break below the 0.7200 will see things get a bit ugly for the aussie in the coming sessions. After yesterday’s poor Q3 GDP report, price has fallen below the two key hourly moving averages which indicates that the near-term bias is also more bearish.
Couple that with a break here, it’s setting up for a rough time for the aussie especially now when calls for the RBA to either stay on hold entirely or even move towards rate cuts next year are starting to grow. And the Australian rates market knows this too. Since the start of the week, 10-year yields in Australia has fallen by a whopping 15 bps so far. In comparison, 10-year Treasury yields have only declined by 10 bps since last Friday.
Watch out for the 0.7200 handle in the sessions ahead, that will be the key level in determining if buyers can regain back some momentum or if the downside break here will head back towards the year’s lows again.