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AUD loses support

Published July 18, 2018

Author: Dennis Li

The Australian dollar was slightly down overnight back below 0.7400 testing support at 0.7370. In its July meeting minutes, the RBA Board agreed the next move in the cash rate would more likely be an increase but not in the near term due to concerns about the impact of high household debt on the economy and the threat of an intensifying global trade war.

The USD rose overnight as Federal Reserve Chairman Jerome Powell provided upbeat comments on the US economy while discounting the impact of the current global tariff war. Following Powell’s remarks, the USD was up to a six-month high against the yen at 112.92 while AUDJPY remained at its one-month high around 83.40.

The sterling dropped by 1.5% to a two-week low against the USD as investors expect more Brexit challenges after Prime Minister May only narrowly won a vote on the trade bill before the British parliament.  AUDGBP is back around the 0.5600  level.

Oil steadied above 67 US dollars per barrel on falling inventories in the US as well as the output constraints in Venezuela.