Outlook Remains Fragile

After dropping as low as 0.7249 AUD/USD recovered in the overnight session and managed to eke out some gains, the pair finished 11 pips higher at 0.7292 thanks to another bump higher in commodity prices where Brent briefly rose above $83/bbl. The rate last trading at 0.7291.

• From a technical perspective despite its recent recovery, the AUD/USD outlook remains fragile following last week's move lower. 0.7194 has been cleared, 76.4% of the Aug 20 - Sep 3 rally and this signals a resumption of the near-term downtrend paving the way for a move towards 0.7106, the Aug 20 low and bear trigger. A break would confirm a resumption of the broader downtrend that started late February. Firm resistance is seen at 0.7330, the 50-day EMA.
• Do note that the APRA has "today increased the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications." The APRA noted that the "decision reflects growing financial stability risks from ADIs' residential mortgage lending." A reminder that yesterday's RBA statement explicitly outlined the need for such a move, noting that "in this environment, it is important that lending standards are maintained and that loan serviceability buffers are appropriate."
• There are no domestic economic releases on the docket today, some focus will be drawn by the RBNZ rate announcement where the median consensus is for a 25bps hike.