- AUD/USD reclaimed the 0.6700 level but is still unable to post any gains.
- The US trade deficit narrowed in July as exports hit a record high.
- Australia’s GDP beat estimates, while money market futures forecast a 50 basis point RBA rate hike in October.
The AUD/USD trades below its opening price on Wednesday, spurred on by sour market sentiment during the Asian session. However, as the European and North American sessions have taken over, sentiment has turned slightly positive, so AUD/USD is making up some ground.
During the day, AUD/USD fell towards the daily low of 0.6698 but bounced back, paring some of its losses. At the time of writing, the AUD/USD is trading at 0.6726, down 0.09%.
AUD/USD on the defensive despite positive data from Aussies
The US Commerce Department revealed that the US trade deficit for July narrowed as exports hit a record high, which could weigh on and contribute to third-quarter GDP growth. Later, Cleveland Fed President Loretta Mester crossed paths with the press saying the latest labor market report showed signs of moderation. She added that markets should focus on the path of interest rates and not “one particular meeting”. Furthermore, she stated that she will decide the size of the rate hikes at the September meeting, and that she is not convinced that inflation has peaked yet.
On the Australian front, the second quarter Gross Domestic Product expanded according to estimates by 0.9% qoq, while Australia grew at a 3.6% pace in annual terms. Meanwhile, money market futures expect a further 50 basis point interest rate hike by the Reserve Bank of Australia (RBA) in October, and the yield curve sees rates peaking around at 3.85%.
AUD/USD Price Analysis: Technical Outlook
From the perspective of the daily chart, the AUD/USD appears to form a double bottom. Wednesday’s daily low tested a descending resistance trendline, drawn from the April 2022 highs, which turned into support, quickly rejecting lower prices, retaking the 0.6700 level. However, to validate the above chart pattern, AUD/USD needs to reclaim the 0.7136 resistance. Otherwise, a drop below 0.6698 could pave the way for a retest of the year’s low.
Technical levels
Source: Fx Street
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