WEEKLY CURRENCY OUTLOOK

• This week, we have multiple high-impact data releases for both AU & US markets.
• The AUDUSD is falling back into the range with strong selling pressure after peaking at 0.6900.
• Expecting the AUDUSD to range between 0.6690 and 0.6810 this week on technical analysis.

• Highlight economic event for this week is the US Fed Funds Rate, where a 25bp increase is widely expected and priced into markets.
• The key point to monitor would be Powell’s comments on the likelihood of a 2nd consecutive rate hike following this one.
• Given that inflation is decelerating and dropping at a face pace, we expect the Fed will closely monitor economic data to make that decision.
• This will definitely have an impact on the USD, and we could see a sharp move if there is no change in rates, so watch this space (4 am Thursday).
• AUD/USD faces multiple headwinds from both the AU & US markets, per the below table.
• We expect an overall weaker USD, which could support the AUD this week with some potential volatile moves.
• AU CPI will be highly watched by all finance buffs to provide key indication on insights into the next potential RBA rate hike.
• Should CPI be materially lower, then there may be a case for another pause.
• An August rate hike is only 50% priced in.