The RBA is amplifying a move lower by the AUD that would have happened anyway this week, as the USD is bouncing against all ‘risk’ and ‘commodity’ currencies.
The USD is at an interesting place. It’s been heavily sold off in recent months as the markets have come to expect no further increase in the interest rate for a while. Then we got a failed technical breakdown last week, which is technically bullish and now the weak shorts are being shaken out.
But unless we get a really strong jobs report tonight, where is the catalyst for the USD to continue to strengthen in the coming weeks?
The US Federal Reserve has been very mindful of international issues in its recent decisions. Right now, equity markets look vulnerable, the yen has been surging, and the next US interest rate decision is just days before the Brexit vote. None of this is USD-positive.
Unless we get some US data surprising to the upside (especially inflation and consumption data) I think the USD downtrend will resume.