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AUD/USD gapped below $0.7500 at the open and traded at the lowest since May 2009 at $0.7450. The risk-off tone seems to be working against the AUD and, judging by the sharp falls in iron ore, the AUD could be in for further weakness.
The Reserve Bank of Australia meets tomorrow and no doubt this latest dip in the AUD/USD will be well received. While no change in policy is expected, it’ll be interesting to see if the uncertainty in Europe and China will deserve a comment. These situations present risks for global markets and central banks will have to tread carefully around them.
This week we also have local jobs numbers, which have been very choppy of late. On the other side of the equation, the US dollar will be taking its lead from FOMC meeting minutes that could possibly sound a hawkish tone.
Today’s move saw AUD/USD slip below an uptrend that has been in place since October 2008. I feel traders will be taking advantage of strength in the near term for selling opportunities. There is another uptrend support line that has been in place since 2001 and comes in at around $0.7150.