In today's AUDUSD price outlook, the pair was capped below the 0.7050 level by developments between the US and China on trade and its domestic outlook.
21 January, 2020 – HYCM – Although we have seen some positive AUDUSD strength in the run-up to the signing of the US-China trade deal, the price has been capped underneath the 0.7050 handle.
AUDUSD fundamental highlight
We will need some new, fresh positive US-China trade talk on phase 2 aspect of the deal. This is needed if we are to see any more AUDUSD strength in the short term. In particular, look for headlines concerning Intellectual Property rights. This is an important issue that will be discussed in phase 2 deals.
The monetary policy minutes from the RBA’s December meeting provided a case for rate cuts ahead if incomes remain pressured. However, the RBA does not consider the current level of wage growth enough to reach their inflation goals. The employment release this week will be important for the AUDUSD pair going forward. Also, CPI data will be released on January 29.
AUDUSD price outlook is bearish
The positive retail sales released last week have reduced the chances of a rate cut in the near term. Sadly, we can expect some negative data to start coming through due to the devastating Australian bush fires. This will impact Australian employment levels, tourism to the country, and consumption.
Therefore, as a result of a weak Q4 2019 and the expected impact of bush fires the overall outlook for the AUDUSD is bearish. Bear in mind that the RBA might cut rates to 0.25%. If that happens, then that will be the level at which QE may come into play. QE weakens a countries currency and would accelerate AUDUSD downside. Presently, I am expecting AUDUSD sellers on retracements.
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