AUD/USD: headed back for a test of the 0.80 handle?
Currently, AUD/USD is trading at 0.7952, up 0.02% on the day, having posted a daily high at 0.7966 and low at 0.7946.
AUD/USD is in a minor recovery of the reversal from the 0.7905 lows that were planted when the risk-off tone developed in the wake of escalating tensions around the N.Korean situation.
How to read into the latest market reactions on North Korean threats? - ANZ
The fear gauge, aka the VIX, was faded heavily by 3 handles from the opening level while US yields tried to recover as did the DXY. The US benchmark ten-year yields closed -1.37% within a day range between 2.0841 - 2.1414%. The DXY was trading and recovering in a range of between 91.62 - 92.36 closing at 92.32.
However, the markets decided that there were no imminent threats and instead concentrated on whether the Fed will be in a position next month to starts reducing its balance sheet, let alone hike rates in December. This lead to a rally in risk, and a recovery in the US stock market's that eventually filtered through to further demand for the greenback and had the Antipodeans on the backfoot again despite a robust performance in copper prices once again.
Key event risks coming up - Westpac
AUD/USD 1 day:
However, for the day ahead, analysts at Westpac suggest that AUD/USD heading towards 0.8000, as long as the US dollar remains downtrodden.
AUD/USD 1-3 month:
The analysts at Westpac argue that if the RBA remains firmly on hold, as we expect, and the US dollar rises on tighter Fed policy, then AUD/USD could fall to 0.76 by year end.
AUD/USD levels
Valeria Bednarik, chief analyst at FXStreet explained that in the short term, the 4 hours chart shows that the price remains well above a bullish 20 SMA that converges with a Fibonacci support around 0.7935, while technical indicators have turned sharply lower within a positive territory.
"Below the mentioned support, the pair may correct lower, down to 0.7870 a strong static support, albeit losses below this last seem unlikely," Valeria noted.