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AUDUSD – Can It Power Through .7500?
The Aussie went for a roller coaster ride today dropping 30 pips on news that Current Account data came in softer than expected with net exports printing at -0.7% versus -0.4% eyed. This is likely to cause a downward surprise in the GDP reading later tonight. The market is anticipating 0.2% print but it is quite possible that the reading could actually come in negative.
Nevertheless, the Aussie regained all of the losses after RBA reaffirmed its neutral stance in its monthly statement which kept rates at 1.5%. With US yields continuing to compress, the Aussie is benefiting from carry trade flows, but that dynamic will only last if the market believes that the yield is secure. If the GDP data does turn negative, it will create a fresh set of worries about the prospect of further easing and the pair will be vulnerable to further downside shocks and could test the .7400 figure on any miss to the forecast.