AUD under pressure ahead of RBA minutes

AUD/USD has come under severe selling pressure at the open of markets in Tokyo, extending its losses towards 0.7540 session lows ahead of the RBA minutes, with market participants either pricing in a more dovish outcome or taking the price towards more attractive levels to re-engage in long-side business.

It is worth noting that last week's COT showed specs commiting to fresh new long positions in the Aussie. If one adds into the mix the fact that Australia's fundamental data continues to be solid (recent Aus emplyment numbers + NAB business confidence came upbeat this month), the RBA may find little justification, for now, telegraphing lower rates. If the RBA were to confirm this anticipated view, the AUD may re-claim current lost ground and potentially resume its uptrend.

Will the RBA signal lower rates?

As Westpac's Strategist Imre Speizer notes: "RBA's July statement showed an intent to assess the data at that time and potentially calibrate policy in August. We’ll be looking for hints of a low inflation led rate cut."

Kathy Lien, Co-Founder at BK Asset Management, notes: "When the Reserve Bank of Australia left interest rates unchanged earlier this month they expressed concerns about the global economy and impact of Brexit, but there was no real urgency to lower interest rates. AUD rallied in response so if the minutes echo this sentiment, AUD could extend its gains particularly against NZD. "

AUD/USD technical outlook

Technically, Valeria Bednarik, Chief Analyst at FXStreet, observes: "Investors will be looking there for clues of upcoming rates' moves in the country. If the RBA opens door for further cuts amid recent local political turmoil  the Aussie may fall as low as 0.7450 against the greenback during the upcoming sessions."

Technically, Valeria adds: "The pair  has made little progress, as in the 4 hours chart the pair has been clearly consolidating below the mentioned Fibonacci  level at 0.7600, although technical readings suggest the risk is towards the downside, as the price is below a bearish 20 SMA, whilst the technical indicator have turned modestly higher, but are still within negative territory."