|S1: 0.7800||R1: 0.8000|
|S2: 0.7730||R2: 0.8011|
|S3: 0.7700||R3: 0.8060|
The Aussie briefly dipped below 0.78 as renewed expectations of a December Fed hike and the prospect of US tax cuts saw the AUD continue to fall.
The AUD has continued to fall since last Tuesday’s shooting star candlestick formation. It has breached the two-month support barrier of 0.78 22. We’ve traded below the 14 day MA for the last 8 days, something we’ve not seen since April. The next key level of support will be 0.7730, if we see a breach of this we could well see the AUD continue to slide.
Though we saw broad-based USD strength last week traders will likely want to see more details on the tax plan and gauge the political viability of the proposals.
The RBA will likely keep policy unchanged maintaining a cautious stance. The meeting should be neutral for AUD, which will likely continue to be driven by short-term iron ore price dynamics.
Although the RBA has maintained a cautiously optimistic bias on growth in recent months, low wage growth and worries of the impact of higher rates on household debt servicing will likely keep it restrained.