AUD/USD

Risk assets may be on the rise, but it is more due to a pause in risk off as opposed to buyers rushing back in. Still, it could still allow for some bullish wriggle room on AUD/USD and bitcoin if sentiment allows.

The Reserve Bank of Australia (RBA) refrained from delivering a dovish shift following its August monetary policy decision, acknowledging that while the economic outlook remains highly uncertain, inflation remains above target and is proving persistent. It's still refusing to rule anything in or out.

An upside surprise on ISM services helped slow the bleeding on US stock markets and AUD/USD erase heavy losses ahead of todays RBA meeting. Nikkei futures rose 6% after its 12% plunge, which brings hopes for a bounce on the ASX 200 today.

We’ve seen a vast reduction of net-short exposure to yen futures over the past four weeks. And with the yen rising over 4% since Tuesday's close, it’s likely large specs are already net long.

Two RBA speeches and a monetary policy decision along with updated RBA forecasts are the highlights of the week for AUD/USD traders on the domestic front. Although risk-off tones and an ISM services report could prove to be the bigger drivers.

AUD/USD is under pressure while ASX 200 SPI futures are flying following Australia’s Q2 consumer price inflation report, reflecting surprisingly modest underlying inflationary pressures that all but extinguish the risk of another RBA rate hike this cycle.

This time tomorrow we will have the conclusion of the highly anticipated BOJ and FOMC meetings, with a clearer idea of whether the RBA will be forced into action after today’s quarterly inflation report.

August has historically been the weakest month for GBP/USD and AUD/USD - see what other past tendencies we can glean about forex seasonality in the upcoming month!

AUD/USD tracked copper prices lower for a sixth day, during its worst day in six weeks. Whilst both markets shows the potential for further losses, these may not be the ideal levels for bears to enter.

I suspect we’ve entered a phase where politically-driven sentiment carries more weight than domestic data for AUD/USD. And with the VIX rising alongside political uncertainty, volatility could favour bears over the coming months as we head towards the US elections.

It has been a turbulent 24 hours for markets with Wall Street indices extending losses, dragging AUD/USD and copper prices lower.

Australian unemployment may have risen, but so did all other key metrics including job growth and the participation rate. And that has likely provided a floor for AUD/USD and AUD/JPY over the near term.

AUD/USD probed a key support level after erasing most of the past six days of gains in just two. And that suggests there could be further downside before bulls step back in. The combination of strong earnings, dovish Fed comments and softer Canadian CPI was enough to push gold and the Dow Jones to record highs, which enjoyed their strongest day's performance in 4 months and 13 months respectively.

Large speculators flipped to net-long exposure to EUR/USD futures after a 2-week hiatus, whilst AUD/USD breached the bullish threshold for the first time in three years according to the commitment of traders report (COT).

China's third plenum, New Zealand inflation and the Australian labour force report are potential drivers for AUD/USD this week.

It will likely take more than one bearish reversal candle to spoil the bullish trend structure of AUD/USD, and there's plenty of support nearby to excite dip buyers. USD/JPY has likely returned to a shell-socked state after a surge of volatility toppled the pair for a clear break below 160.

The upcoming release of US inflation data is likely to alter the odds of a September rate cut in the direction of the surprise, putting the AUD/USD forecast into focus after it surged through a major long-term resistance trend.