Buy AUDUSD – Forex Trading Tips

Our trade call today is to buy AUDUSD from current price with a stop at 0.7130 and a target of 0.7245.

Current Market Sentiment:

Yesterday’s NY session saw the Fed keep rates on hold as was widely expected. Given the large gap between core PCE at 1.2% and the target of 2%, it was highly improbable that the Fed would act. The decision was accompanied with a slightly dovish statement which again recognised the subdued inflation, however the Fed assigned this as transitory. The statement also noted external risks to the economy regarding a slowdown in global demand and uncertainty over China. The economic projections saw minor downgrades of Fed funds rates expectations and a lower inflation expectations. The press conference was also relatively dovish however Yellen did state that they discussed raising rates. Although 13 out of 17 FOMC member see a hike this year, for this to occur core inflation must move higher. The USD weakened during the event however did reverse most of its losses after the press conference finished. The dollar should remain pressured for subsequent sessions.

The Asian session was relatively light apart from comments from RBA’s Stevens. He said that the economy is growing at a slower pace than hoped, however non-mining activity was improving and unemployment is low. Overall his speech was upbeat as he indicated that the economy was not in too bad shape and that he was content with where rates are now. Aussie was unaffected by his comments, however this will likely be interpreted as bullish for the AUD.

Elsewhere, Westpac forecast the RBNZ remaining on hold in October then but then resuming the cutting cycle in December.

The BOJ also released the minutes from their July 14/15 meeting, which contained no surprises.

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