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AUD denied at 200 SMA

Published July 22, 2019

By George Hopkinson

After pressing to 12-week highs at the end of last week, the AUDUSD has found stability this morning in the mid-0.7000’s.Along with other major currency pairs, the Aussie came under pressure from the greenback strength as expectations of a 50 basis points Fed rate cut were hosed down. Continuing uncertainty surrounding the US-China trade deal and lack of positive data/events also weighed on the AUD.

USD strength also grew off the back of a ‘flight to safety’. There’s been political tension surrounding Iran seizing two UK oil tankers, later releasing one of them.
In technicals, the AUDUSD is struggling to break the 200 SMA which is sat just under the 0.71 figure.

This week ahead is generally light on economic data and central bank announcements. The most important event will be the ECB’s rate decision. The ECB’s refinancing rate is already at 0.00%, with the deposit rate set at -0.40%. It will be hard for them to cut rates any further – but markets are pricing in a 55% chance of rate cut to -0.50% on the deposit rate. Either way – we are likely to get a clear sense from the ECB on what their plan is to tackle the recent global economic downturn.

On Wednesday morning (Australian time) we will expect a new British Prime Minister. Bookmakers are tipping the divisive pro-Brexit campaigner Boris Johnson to get the job.