by Chris Becker
Friday night saw a temporary bounce in the Australian dollar on the initial impact of the US unemployment print, but this has been short lived coming into the quiet session here in Asia today:
The four hourly chart above is illustrative, showing significant resistance overhead at the 74 handle versus USD with momentum barely kicking along and unable to get into positive territory.
A reminder that going into tomorrow’s RBA meeting, where expectations are on for yet another hold, that the Pacific Peso remains in a medium term decline:
The next downside target here is 73 cents, which could break if the RBA signals any lack of resolve. The Fed is likely to raise rates at its next meeting in September, which will further extend the yield differential between the two nations. Given the increasing risk around the growing trade war with China, there remains little upside return to the heavy risk that is the carry trade in AUD.