AUD/USD Susceptible To Defined Range Amid Failure To Test May Low

AUD/USD is little changed from yesterday as RBA Deputy Governor Guy Debelle recognizes that the renewed lockdown in Victoria is “a bit longer” than previous occasions, but it seems as though the central bank will retain the current course for monetary policy as “what we’ve seen with those short, sharp lockdowns is that things came back pretty quick.”

Debelle acknowledged that the “growth number today which is marginally stronger than what we had in those numbers back in May” while speaking to Australian lawmakers in Canberra, and the comments suggest Governor Philip Lowe and Co. are in no rush to switch gears as the central bank is on track to complete “the second $100 billion of purchases under the government bond purchase program in September.”

In turn, Governor Philip Lowe and Co. may continue to endorse a wait-and-see approach at the next meeting on July 6 as “the economic recovery in Australia is stronger than earlier expected and is forecast to continue, and AUD/USD may continue to track the May range as both the RBA and Federal Reserve appear to be on a preset course.

However, the range-bound price action in AUD/USD has spurred another flip in retail sentiment as 46.45% of traders were net-long the pair during the previous week, with the IG Client Sentiment report showing 52.04% of traders currently net-long the pair as the ratio of traders long to short standing at 1.08 to 1.

Image of IG Client Sentiment for AUD/USD rate

The number of traders net-long is 3.05% higher than yesterday and 9.52% higher from last week, while the number of traders net-short is 7.10% lower than yesterday and 1.49% lower from last week. The rise in net-long position comes amid the string of failed attempts to test the May low (0.7675), while the marginal decline in net-short interest could be a function of profit-taking behavior as AUD/USD tags a fresh weekly high (0.7773) following the update to Australia’s GDP report.

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