AUD/USD: consolidated at key support ahead of RBA tonight

AUD/USD is down consolidating the sell-off from above the 0.76 handle with a stronger US dollar, despite last week's GDP shocker from the US.

AUD/USD is consolidating at a key support area while the greenback seems to have a mind of its own, despite the continued poor data prints, from today's retreat in ISM manufacturing numbers on top of last week's GDP revisions and poor first estimate misses of expectations. The key event for the Aussie in its own right will be the RBA even coming up in the Asian shift tonight. 

The RBA could cut rates by 25bps, and if so, the market will be tuned into what their outlook is and why that they have suddenly decided to take action. It may be due to unemployment rising, global head-winds and the rising threat of deflation or global stagnation as Alan Greenspan recently warned of on Bloomberg television. It could be due to the idea that the Aussie is still overvalued and risks remain to the upside given a worsening US economy and weaker outlook for the US dollar, let alone because inflation is below their preferred target bracket of between 2-3%. 

Well, well, well ... Do you still think the Fed will hike rates?

However, reasons to hold at 1.75% could be because there have not been any significant nor negative impacts to the Australian economy since the last meeting and that the economy is still on track for 3% GDP this year while there have been signs of a stable housing market and stability in the inflation rate, in fact beating expectations recently and back above 1.5%, and like the Fed, they perceive risks to the economy diminished for the time being while the initial shock and impact of the Brexit vote have somewhat dissolved in recent weeks.

AUD/USD levels

Spot is supported and consolidating around the 26th July spike high at 0.7565. Below the 0.75 handle, the immediate support comes at the May low comes in at 0.7490 and has been a historically strong level for both bids and offers. A break there and below the 100 dma is at 0.7487 opens the 50 dma at 0.7436 and 90 pips lower lies the 200 dma. To the upside, 14th July high stands at 0.7659 ahead of the May highs of 0.7718.