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AUD/USD Has a Bad Week at The Office

AUD/USD Has a Bad Week at The Office

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AUD/USD is on course to finish lower ever day this week after fed speaker Bullard insisted a 75-basis point hike at the next FOMC is very much on the table.

The Aussie has lost over 3.00 percent vs the greenback this week as the US dollar resumes its bull market. A series of encouraging data across the pond is helping the buck to it’s fifth consecutive daily gain against the Aussie this morning.

A jam-packed data schedule yesterday kicked off with the minutes of most recent Federal Reserve Open Market Committee (FOMC) meeting. After that came the Philadelphia Fed manufacturing data and the Initial Jobless claims. Whilst the Existing homes sealed the deal late in the day.

It was a mixed bag of data sets. The FOMC minutes showed fed members remain steadfast in maintaining the current hawkish path. The view was echoed by St. Louis Fed President Jim Bullard who told reporters he is leaning towards supporting a 75bp hike at the next meeting.

Initial Jobless claims came in at 250k, less than the expected 265k, and down on the previous month’s 252k. Whilst the August Philly Fed Manufacturing came in much hotter than expected at 6.2 vs expectations of -5.0, way up on July’s -12.3. Both of which give the Fed ample breathing space to continue tightening monetary policy at the current rate.

The Existing home sale for July came in at 4.81m, slightly softer than the projected 4.89m. Although the print shows the housing market is cooling, it was not enough to offset the positive numbers released earlier in the day.

As a result, the US dollar index jumped to a four-week high of 107.50, exerting downward pressure on AUD/USD. Which subsequently continues to probe lower beneath the 50-Day Moving Average (DMA)

Aussie Dollar to US Dollar Exchange Rate

The daily chart shows AUD/USD is grappling with the support of the 50-DMA at 0.6918 (green line). Depending on how the Aussie performs here will set the tone for the next leg in either direction.

If AUD/USD closes below the 50-DMA, we can expect the buck to strengthen further. In this event, an extension down into the 0.6700 – 0.6800 range is likely.

On the other hand, if the price continues to cling to the 50-DMA, it could mark a reversal. Here, the 100-DMA at 0.7054 (blue) is a logical target for the bulls.

AUD/USD Price Chart


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Elliot Laybourne
Elliott is a former investment banker with a 20 year career in the city of London. During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making. During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others. Today, he splits his time between Thailand and Dubai, from where he provides trading consultancy and business development services for family office and brokerage clientele.