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Greenback Reverses Early Advance, AUD Soars Before RBA

FOREX
  • News from Opec+ regarding surprise crude output cuts inspired a firm rally for the US dollar in early trade on Monday. However, a sharp reversal lower for US yields, exacerbated by lower-than-expected US ISM Manufacturing data have prompted a substantial reversal lower for the USD index, which sits down 0.3% as we approach the APAC crossover.
  • Leading the G10 charge on the rebound has been the Australian dollar. AUDUSD is currently up 1.36% on the day and is trading at the highest levels since February 24. The 50-day exponential moving average at 0.6751 has been breached, signalling scope for a stronger short-term recovery. The significant rally comes before Tuesday’s RBA decision where analysts remain split between an unchanged decision and a 25bp rate hike.
  • USDJPY (-0.45%) weakness also prevailed amid the lower US yields with the pair reversing over 1% from the overnight 133.76 highs. Overall, trend conditions remain bearish with gains being seen as technically corrective to this point. The 50-day EMA, intersecting at 133.34, was breached earlier today but remains the key short-term hurdle for bulls.
  • Similar half a percent gains have been seen for the likes of EUR, CAD, NZD and GBP.
  • Cable has regained the 1.24 handle on Monday with recent gains exposing resistance at 1.2448, the Jan 23 high and this remains a key medium-term hurdle for bulls. A break of this level would highlight a 3-months range breakout and more importantly, a resumption of the uptrend.
  • Following the RBA decision on Tuesday, JOLTS data highlights the US docket. Focus then turns to the RBNZ on Wednesday before the US ISM Services PMI data.
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