Finance 0

USD/CAD Fails To Test July-Low & Initiates Bullish Sequence

By Kurt Osterberg · On August 30, 2017

Ticker

Last

High

Low

Daily Change (pip)

Daily Range (pip)

AUD/USD

0.7916

0.7996

0.7906

AUD/USD gives back the advance from earlier this week follow a batch of positive data prints coming out of the U.S. economy, and the pair may continue to consolidate ahead of the highly anticipated Non-Farm Payrolls (NFP) report as market participants mull the outlook for monetary policy.

With the Reserve Bank of Australia (RBA) widely expected to preserve the record-low cash rate at the September 5 meeting, Governor Philip Lowe and Co. may merely attempt to jawbone the local currency as ‘an appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.’

As a result, market participants may put increased emphasis on U.S. data prints as the Federal Reserve ‘expects to begin implementing its balance sheet normalization program relatively soon.’ The greenback may trade on a firmer footing ahead of the next Federal Open Market Committee (FOMC) interest rate decision on September 20 as the economy is projected to add another 180K jobs in August, and Chair Janet Yellen and Co. may stay on course to deliver three rate-hikes in 2017 as the economy approaches full-employment. However, a Fed officials may project a more shallow path for the benchmark interest rate as inflation continues to run below the 2% target, and the bearish sentiment surrounding the U.S. dollar may persist throughout the remainder of the year as Fed Fund Futures highlight narrowing expectations for a move in December.

AUD/USD Daily Chart

AUD/USD may once again threaten the upward trend from May as it struggles to test the monthly opening range, with the near-term outlook largely capped by the 0.8020 (38.2% retracement) hurdle.

Failure to hold above channel support may spur a move back towards the Fibonacci overlap around 0.7850 (38.2% retracement) to 0.7860 (61.8% expansion), with the next region of interest coming in at 0.7808, the August-low; broader outlook remains supported by the former-resistance zone around 0.7720 (23.6% retracement) to 0.7770 (61.8% expansion).