US payrolls have reduced the need to taper the Fed’s QE program at the Jackson Hole Symposium in August, and US rates markets have rallied accordingly. We now see December as a more likely setting, but let's see how hot this week’s US CPI will prove to be. Aussie data this week (NAB business confidence, Budget, retail sales) should be seen as vol event.
Tactically, it seems telling that the RBA will struggle to reduce the pace of QE in its July meeting, or they risk diverging policies with the Fed and a far higher AUDUSD. We can already see signs of that with AUDUSD breaking its recent range, where a daily close above 0.7840 would suggest a clear risk for hitting an 80-handle. The momentum seems strong, and if we see this push higher I'd jump on it. While overbought, further tailwinds from copper, iron ore futures and a better bid from Chinese equities could offer a catalyst.
Tactically, it seems telling that the RBA will struggle to reduce the pace of QE in its July meeting, or they risk diverging policies with the Fed and a far higher AUDUSD. We can already see signs of that with AUDUSD breaking its recent range, where a daily close above 0.7840 would suggest a clear risk for hitting an 80-handle. The momentum seems strong, and if we see this push higher I'd jump on it. While overbought, further tailwinds from copper, iron ore futures and a better bid from Chinese equities could offer a catalyst.