USD Trading Outlook (02-02-2015)

AUD/USD A tight range held for AUD/USD in Europe & NY trading. The pair consolidated recent losses as it held to a 0.7730/0.7798 range. The pair was unable to break out as it was buffeted by a falling AUD/JPY & EUR/AUD and rising AUD/NZD. Some doubts over the RBA cutting on Feb 3 also kept traders a bit reticent to move the pair. The Australian ran a piece quoting RBA watcher McCrann seemingly backpedaling on his early week call for the RBA to cut. This added to the pair’s indecision and inability to make headway in either direction. Late in the day the pair sat closer to the upper end of the range as commodities and risk bounced. The pair may stay in limbo until Stevens make his decision. Should rates remain unchanged AUD/USD likely sees a knee-jerk reaction higher. However, if rates are unch and the tone of the statement is dovish the market likely interprets that as rate cuts are coming. AUD/USD should see a new leg lower and test the July 2009 low at 0.7700.