AUD: Important days ahead
Iron ore prices fell sharply again overnight and precious metals also stalled their recent run higher. Short-covering in the EUR/USD elicited a similar reaction from the AUD/USD, which offset the negative metals influence, but it will be very important to see how the Asian market reacts today. Is the market happy to stay short AUD/USD or will it get nervous and test .80 cents?
One of the big French banks put out a sell recommendation in AUD/NZD and that might also have some limited impact.
CPI tomorrow will have the markets full attention, with traders starting to price in the next RBA rate cut. The big risk here in my biased view is that the RBA weighted mean comes in higher than the market’s expected 2.2% YoY and we get a severe short-covering rally. Today’s reaction to the tumbling iron ore price will tell us plenty about how the market is feeling.