More looking for a rate cut

In an article on Bloomberg yesterday, they said that expectation for a rate cut in Australia has risen to 68% from 41% on March 17th. The price of iron ore a major export for Australia remains near recent low levels.

IRON ORE

The CRB index of Spot Raw industrials is also at low levels (See chart below).

CRB spot raw industrials

Westpac Banking corp and ANZ Banking Group are saying a cut is possible due to the lower commodity prices. They also cite the unemployment rate which is close to the highest level going back to 2002.

From a technical perspective, the price has moved back below what was an area where swing highs have occurred going back to early February. There have been a few extensions to the upside – earlier today, there was a move back above. However, currently with the price below the ceiling (yellow are between 0.7840-0.78593), there are 3 lower highs on the 4-hour chart (see chart below).

A lower trendline comes in on the for our charts and 0.7807. A move below this level would next target the 50% of the move up from the March 19 low. That level comes in at 0.7774. The 200 bar moving average at 0.7760 and 100 bar moving average at 0.7726 will then be targeted. There is nothing to stop a further decline below those 2 moving averages especially if the expectations for a rate cut start to increase.

Technically, if the sellers are to remain in control and if the AUDUSD has turned back to the downside, the price should not trade back above the aforementioned resistance at 0.7040 to 0.78593 (risk for shorts) If indeed the push higher in the AUDUSD is over, lLook for sellers on rallies toward this area with stops above.