Before the RBA Rate Statement
The Friday before the RBA was a tough day for fundamental analyst traders who solely based their trading on the NFP report that came in at 151K, 21K below expectation. The AUD/USD was only bullish in the first five minutes and then turned around to the downside to the 0.74500 psychological support level maintained earlier in the European Session.
Chart 1: AUD/USD 5MIN
Some of the explanations of the behavior of the USD included;
- The huge impact from the Jackson Hole Symposium that provided a huge boost to the dollar
- The new home sales and durable goods report that beat their expectation also provided a boost to the USD though to a less extent
- Finally, Janet Yellen’s expectations of the rate hike based on the speech delivered Jackson Hole were her conclusion about the US economy was the case for an increase in the federal funds rate has strengthened in recent months.
In Australia, we saw the AUD show strength against the USD with the start Asian session on Tuesday ahead of the RBA. All traders seemed confident that the rate would be maintained since it had been cut by RBA in the month earlier. Furthermore, the reports of the private capital expenditure…