Overnight news (view) - RBA has room to cut, AUD overvalued

• The Reserve Bank of Australia has more room than its counterparts to lower its benchmark Interest rate
• AUD is "overvalued"
• AUD will underperform other commodity currencies
• Sees support around 0.72, a break below could "accelerate falls."
• Resistance, around 78 cents (citing RBA jawboning at around that 2016 high)

• "The margin for conventional monetary policy easing is much higher in Australia compared to Canada and Norway," Gkionakis said in a telephone interview last week. "So from that respect, I can easily see the markets pricing more rate cuts by the RBA compared to Bank of Canada and the Norges Bank."

AUD/USD: Aussie Soars Above $0.76

The Australian dollar surged on Tuesday and was trading 1.3% stronger, hovering around $0.7630 ahead of the US session.

Sentiment was positive on Tuesday again, evident from the rising USD/JPY pair, along with stocks, which benefited higher yielding currencies, such as the NZD and AUD.

On the other hand, "safe-haven assets took a hit: JPY was down 0.50%, gold was treading water at around 1,355 and the Swiss franc was left unchanged against the USD but lost ground against the EUR. EUR/CHF tested 1.09 in Tokyo," Arnaud Masset, market strategist at Swissquote Bank, said on Tuesday.

The $0.7340 is the main resistance as June's highs are located here. If the pair conquers this level, a further rise toward $0.78 might occur in the near-term. On the other hand, the support is still around $0.7570.

Westpac on the RBA - still expecting a cut in August, RBA concerns on AUD

Wespac released their monthly survey of consumer sentiment earlier

• We expect that it will decide to further reduce the overnight cash rate to 1.5%

• "We do not believe that it would have made such significant changes to its assessment of the inflation outlook without being prepared to cut rates further ... we are mindful that despite cutting rates the Board did not lower its growth forecasts indicating that the motivation behind the May decision was entirely around the need to credibly achieve the inflation target over the forecast period"

"Australia added jobs in June: record-low rates & stronger business confidence"

Responses to the good employment data will begin to come in soon

• Record-low interest rates
• Stronger business confidence
• Economy showing greater domestic strength
• Construction, tourism and education helping Australia soak up unemployed miners as a resource boom winds down
• Outlook for business investment remains weak
• Rebounding currency risks competitiveness

AUD/USD forecast for the week of July 18, 2016

The AUD/USD pair initially tried to rally during the course of the week but turned back around and ended up forming a shooting star. The shooting star of course is very negative, and as a result it’s very likely that we could pull back. However, I see quite a bit of support just below as well so I feel that this is a market that you will have to trade from the shorter-term charts such as the daily price action. A supportive candle is reason enough to go long, just as a break above the top of the shooting star would be.

AUD/USD Holds Channel Base Support

The AUD/USD currency pair traded in a narrow range on Monday as the rising channel support holds the pair above channel support of $0.7575.

Technical indicators are bullish with momentum rising, with the Relative Strength Index (RSI) seen at 57 and the Moving Average Convergence/Divergence (MACD) well above the zero mark.

Upside finds immediate resistance at the 5-day moving average of $0.7605, with breaks above potentially triggering further upside.

Further resistance levels are located at the July 13 high of $0.7638 and the July 15 high of $0.7676.

Weakness can only be seen on a break below the channel base of $0.7575, with a test of the 20-day moving average of $0.7513.

Australian CPI data for the second quarter due on Wednesday, July 27 are keenly awaited after the extremely weak beginning of the year and the subsequent downgrade to the RBA's inflation profile. ​

Trade idea: Buy on breaks above $0.7600 with a stop loss at $0.7575 and target $0.7650-$ 0.7675.

AUD/USD: Aussie Jumps Ahead of RBA Minutes

The Australian dollar was again performing strongly on Monday and was seen 0.25% higher during the London dealing, testing the $0.76 mark.

Traders will pay attention to Tuesday's Reserve Bank of Australia (RBA) minutes from the latest monetary policy decision, where the central bank kept the rate unchanged at 1.75%. The aussie has been strengthening since that meeting and reached two-month highs against the greenback.

Australian CPI data for the second quarter due on Wednesday, July 27 are keenly awaited after the extremely weak beginning to the year and the subsequent downgrade to the RBA's inflation profile. ​

"Underlying inflationary pressures are expected to have remained subdued, and well below the RBA’s 2-3% policy target band. While the quarterly outcomes are forecast to be somewhat higher than in Q1, the average of the two core measures is forecast to decelerate to 1.4% y/y in Q2 from 1.5% y/y in Q1," analysts at ANZ said on Monday.

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Aussie Hits Fresh Lows on RBA Minutes

The Reserve Bank of Australia (RBA) earlier today released the minutes of its July meeting when interest rates remained unchanged at 1.75%.

The minutes confirmed that central bank policy is not on a preset course and reiterated the data dependency.

The aussie extended its slump post minutes to hit the lowest since July 8 even though the RBA did not provide any hint of August easing.

AUD/USD hit a fresh ten-day low of $0.7509 before recovering slightly to trade at $0.7521 levels.

Technical indicators have turned bearish. RSI points south and Stochs have rolled over from overbought zone.

The pair has broken below the 23.6% Fib of $0.7145 to $0.7676 rally at $0.7550, and is currently holding above the 20-DMA at $0.7516.

Below the 20-DMA the next support lies at $0.7473 (38.2% Fib of $0.7145 to 0.7676 rally), and any break below would signal bullish invalidation and lead to a long unwind.

The downside could then test $0.7300 (June 24 lows).

On the flipside, resistance aligns at $0.7595 (channel base), and a close above would invalidate the bearish bias.
​

Trade idea: Go short on rallies around $0.7535/40 with a stop loss at $0.7565 and take profit at $0.75/$0.7475/$0.74.

source

Australia data - Q2 business conditions rise

The National Australia Bank publish a monthly gauge of business conditions and confidence

AUD to new session low

AUD a mover today, its hitting a new session low now under 0.7470.