Talking Points:

– AUD/USD Clings to Bullish Formation Ahead of RBA Meeting.

– USOIL Remains Under Pressure Despite Hurricane Harvey, U.S. Output Approaches Record-High.

Ticker

Last

High

Low

Daily Change (pip)

Daily Range (pip)

AUD/USD

0.7942

0.7954

0.7914

10

40

AUD/USD appears to be on its way to test the 2017-high (0.8066) as the recent developments coming out of the Australian economy put pressure on the Reserve Bank of Australia (RBA) to remove the record-low cash rate.

Even though the 27.9K expansion in Australia Employment was largely driven by part-time positions, the unexpected pickup in the Participation Rate instills an improved outlook for the real economy as discouraged workers return to the labor force. As a result, Governor Philip Lowe and Co. may adopt a more upbeat tone at the next policy meeting on September 5, and the Australian dollar may exhibit a more bullish behavior over the remainder of the year as central bank officials forecast a ‘neutral nominal cash rate of around 3½ per cent, given that medium-term inflation expectations were well anchored around 2½ per cent.’

However, the RBA may merely attempt to buy more time as ‘ongoing low wage growth and the high level of debt on household balance sheets raised the possibility that consumption growth could be lower than forecast,’ and the Australian dollar stands at risk of facing a more bearish fate as the central bank toughens the verbal intervention on the local currency and warns ‘an appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.’

AUD/USD Daily Chart

Chart – Created Using Trading View