To trade short-term sideways – OCBC

The Australian dollar (AUD) rebounded mildly amid broad USD weakness after jobs data disappointed while AU GDP data dragged on, note OCBC FX strategists Frances Cheung and Christopher Wong.

The bullish momentum on the daily chart is fading

“This morning RBA Governor Bullock reiterated ‘that it is premature to be thinking about cutting rates.’ She explained that the RBA’s board was trying to balance reducing inflation within a reasonable timeframe and holding on to as much as possible of recent gains in Australia’s labor market, with unemployment at a low 4.2%.

“She also spoke about the downsides of prolonged periods of high inflation and how the current episode disproportionately affects lower income and young Australians.”

“The pair was last at 0.6725 levels. The bullish momentum on the daily chart declined, while the RSI decline moderated. Recent pullback found interim support at 0.6690/0.6700 (21 DMA, recent low). Decisive break may open room for further decline towards 0.6640. Resistance at 0.6730, 0.6790.”