The Australian dollar is likely to recover further in conjunction with the USD correction, but this should precede a retracement on the back of new RBA rate cuts. FX markets driven by USD retreat for now.
"The dollar rally is experiencing its first serious hiccup (we cautiously scaled back our longs in our trades portfolio). The Fed's dovish stance on the exit pace is fuelling risk appetite. Therefore, high-beta currencies should stay supported, whereas dollar longs are being reduced until domestic factors attract the market's focus again and disrupt their ongoingrebound", said Societe Generale in a report on Thursday.
AUD/USD this week broke the descending channel initiated on last September's high. A near-term bounce towards 0.8020 or 0.8120 seems to be on the cards.
