AUDUSD dips should be limited to 0.7475 - Westpac

Research Team at Westpac, suggests that the hawkish Wyoming headlines knocked AUD/USD into lower ranges but unless US data is very strong our base case of no Fed hike until Dec is intact, taking some heat out of USD.

Key Quotes

“This should limit AUD/USD dips to 0.7475, especially with Australia’s near term domestic outlook supportive. The RBA’s focus remains CPI meaning very low pricing for a cut in either Sep or Oct. Commodities also argue against a major AUD pullback, our export price basket holding near 18mth highs. Still, until the Sep FOMC decision becomes clearer, AUD/USD rallies should be capped around 0.7650, just shy of the mid-Aug highs.

Technical: Consolidation off August's 0.7750-55 high continues with momentum mixed across time frames. Rebounds off 0.7520-25 (standard retracement support) lack impulse and are likely to struggle in the 0.7610-40 area. Failure at this area would suggest deeper retracements towards 0.7450 (50% of the range since late May).”