This is an interesting currency pair. From a fundamental perspective I point you to two very important paragraphs from the RBA meeting minutes posted on 2nd August.

“Low interest rates and the depreciation of the Australian dollar since 2013 were expected to continue to support the necessary adjustments in the economy following the end of the mining investment boom, though an appreciating exchange rate could complicate this.”

AND

“Taking all these considerations into account, the Board, on balance, judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.”

http://www.rba.gov.au/monetary-policy/rba-board-minutes/2016/2016-08-02.html

If we look at this chart and look at the monthly pivot points: MPP – predicts – MS2. I will watch for price to retrace back to the MPP (0.7586) and then sell in the red zone with a target of MS2 (0.7318). As we are coming down also watch for price to bounce/stall at the 200-day moving average (green) as price normally respects this line.

My fundamental bias on this pair is to the downside [bearish]. Watch out for AUD calendar events coming up in the following week that could also move this pair (also don’t forget fundamentals on the US side e.g., NFP, unemployment rate…etc)

Today 1 Sept:
CapEx which reflects investments released every quarter -5.4% (miss)
Retail Sales 0.0% (miss)
Chinese Caixin Manufacturing PMI 50.0 (miss)

Monday 5 Sept:
ANZ jobs, Company Profits
Chinese Service PMI

Tuesday 6 Sept
Interest rate decision (no change expected)

Wednesday 7 Sept:
Australian GDP (Q2)

Thursday 8 Sept:
Trade balance

4 thoughts on “AUD_USD (sept monthly outlook)”

  1. Miles says:

    Thank you for pointing out RBA meeting minutes. If NFP are good it would be hard for this pair to go back up to MPP before further losses

  2. Damith says:

    Thanks for your comment Miles, I agree with you 100%, that would be something to definitely watch out for along with other US data driven news events…

  3. dima pekurovsky says:

    Hi Damith, thank’s for great fundamental analys and chart. Great post!!!!

  4. alex p says:

    For me the news driven volatility will make this pair difficult to trade for the short run… that said the monthly pivot looks quiet tasty. Lastly I would not hold your breath for the Australian econ to bounce back until commodities bounce back – apart from building new apartments I do not see much going on (in my opinion)

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