Despite a small bounce yesterday afternoon, when the AUD recorded a move close to USD1.0850, the AUD has failed to find any further support to break higher. Key resistance is just below the USD1.0900 level, and we'd need to see a break of this level to open the way for a move back towards USD1.1000.
The Reserve Bank's decision to leave official interest rates unchanged earlier this week has clearly increased the relative attractiveness of the AUD, particularly given the low levels of official interest rates throughout the rest of the developed world.
If the AUD continues to rally, and if we were to sustain levels above USD1.1000, the RBA may come under increasing pressure to cut interest rates to try and relieve some of the pressure on Australian exporters, as well as local businesses in manufacturing, tourism and retail who, on a combined basis, employ over two million workers.
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