Pressure mounts on AUD as iron ore slips further

AUD/USD ventured below $0.7600 briefly and remains under pressure heading into today’s Asian trade.

Source: Bloomberg

A close below $0.7600 would be detrimental for the pair in the short term and could result in further losses. A potential retest of March lows in the 0.7560 region is on the cards and today brings a few releases that could cause some volatility. On the calendar we have building approvals and most importantly China manufacturing PMI numbers. Expectations are for a reading in contractionary territory and this is consistent with weaker iron ore prices. Given the AUD has been tracking iron ore recently then further weakness would be detrimental. There has been a lot of talk around the RBA and the market is increasingly calling for an April cut. Analysts feel with the way iron ore prices are going, there is really no reason for the RBA to wait much longer. Today we also have commodity prices due out then tomorrow we have trade balance. Traders will be looking to remain short the AUD heading into Tuesday’s rate decision. Market now pricing in a 70% chance of a cut next week. AUD/USD is now also back below the September downtrend which had capped the price action for a while.



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