FundamentalOverview

Last Thursday, WSJ’sTimiraos published an article which seemed suggesting that a 50 bps cut wasstill being discussed. The market responded by raising 50 bps cut probabilitiesto around 40% from 13% before the news.

Nick Timiraos is considereda Fed “insider”, so the market is attentive to all of his pieces concerningpotential Fed decisions. Since then, the 50 bps camp got more vocal and theprobability for the Fed to cut by 50 bps at the upcoming meeting stands nowaround 70% with a total of 120 bps of easing by year-end.

This repricing weakened theUS Dollar across the board as Treasury yields fell further. Once we are donewith the Fed decision though, the focus will switch back to the economic data.In case we start to see better figures, the market might start to pare back theaggressive easing expected in 2025 supporting the greenback in the short-term.

For the RBA, the marketsees a 91% probability of no change at the upcoming meeting and a total of 21bps of easing by year-end. The central bank keeps its fairly hawkish stance asinflation has been slow to return inside the target range and the labour marketremains resilient.

AUDUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that AUDUSD bounced around the 0.6650 level and eventually rallied backabove the key 0.67 resistance increasing the bullish momentum.The target for the buyers should now be the 0.68 handle where we can expect thesellers to step in with a defined risk above the level to position for a dropback into the 0.67 handle.

AUDUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the bullish momentum increase as the price broke above the 0.67 resistanceand the trendlineas more buyers piled in while the sellers squared their positions. There’s notmuch else to glean from this timeframe, so we need to zoom in to see some moredetails.

AUDUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have an upward trendline defining the current bullish momentum. Thebuyers will likely keep on leaning on the trendline to position for moreupside, while the sellers will look for a break lower to pile in for a dropback into the 0.67 level. The red lines define the average daily range for today.

UpcomingCatalysts

Today we get the US Retail Sales and the US Industrial Production data.Tomorrow, we have the FOMC Rate Decision. On Thursday, we get the Australian LabourMarket report and the latest US Jobless Claims figures.