- House prices in Australia rose in August, continuing an established upward trend.
- Investors estimate a 78% chance of an RBA cut in December.
- Experts predict an improvement in the US labor market in August.
AUD/USD outlook shows bullish sentiment as Aussie rebounds after upbeat Australian housing data. At the same time, the dollar fell from its recent peaks as investors awaited a key US non-farm payrolls report.
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Data on Monday revealed that Australian house prices rose in August, continuing an established upward trend. Home prices in the country rose by 0.5% during the month, above the 0.3% increase in the previous month. The figures indicated an increased demand for housing.
Furthermore, it reduced the likelihood of a rate cut by the Reserve Bank of Australia this year. Investors are currently pricing in a 78% chance of a decline in December. Meanwhile, policymakers predict the first cut will come next year.
On the other hand, markets are waiting for a Fed rate cut in September. The only uncertainty is the size of the rate cut. Accordingly, the upcoming non-farm payrolls report will play a significant role in determining the size of the rate cut.
The previous jobs report pointed to a weak labor market that prompted investors to cut rates by 50 basis points. However, in August, experts predict an improvement in the labor market. Job growth could increase by 165,000, while the unemployment rate could decrease to 4.2%. If that’s the case, the Fed is likely to implement a 25 bps rate cut. On the other hand, if the labor market shows further deterioration, investors will expect a more aggressive Fed.
AUD/USD key events today
Market participants are not expecting key reports today. As a result, the pair could consolidate.
AUD/USD technical outlook: Bearish pressure below 0.6800
On the technical side, the AUD/USD price is retesting the 30-SMA resistance after the recent breakout. The price was trading in a solid bullish trend that failed to break the critical psychological level of 0.6800. The bullish momentum faded and the RSI showed a bearish divergence with the price.
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The bears took control when the price broke the SMA and the RSI fell below 50. However, the price must break below the 0.6700 support to make a lower low and confirm a reversal. If it doesn’t, the bulls could come back stronger to make a new high above the 0.6800 resistance level.
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