It may not feel like it but the aussie actually had its worst month since 2014 against the dollar in April. Yes, the drop on the month even eclipsed that of the pandemic.
It’s been a rough ride for the currency as the dollar went rampaging across the board, coupled with a major dent to risk sentiment and also China weakening its yuan significantly in the past two weeks.
The chart highlights that sellers are setting their sights on key support at 0.7000:
It’s all down to the RBA and the Fed next week but for the aussie’s sake, it needs the RBA to deliver in a big way to really sustain any plausible upside momentum. As things stand, a 15 bps rate hike is nearly priced in for this week but a move to 0.50% has already been priced in by June i.e. 15 bps tomorrow and then 25 bps on 7 June.
Considering that sort of pricing, the only major upside for the aussie is if the RBA hikes by 40 bps to 0.50% tomorrow. That is something which was pointed out last week already here.
As things stand, a 15 bps rate hike will throw the ball to the Fed’s court the day after while a decision not to hike the cash rate at all will surely weigh strongly on the aussie.