FX.co ★ AUD/USD

AUD/USD is trading at 0.7010 as of Thursday morning, down 0.21% during the session as the AUD pulled back from a new monthly high. Higher geopolitical risk in the Middle East and rising oil prices are pressuring the risk-sensitive currency, while the RBA's dovish stance and a weak USD are limiting losses. Market sentiment turned negative as renewed Middle East worries resurfaced. There were reports that a drone strike was conducted against the Saudi Arabian Shaybah Oil field and that some US diplomats withdrew from the Gulf area. These factors have pushed West Texas Intermediate (WTI) oil prices higher, adding to downside risks for the Australian Dollar. As an energy importer, Australia will continue to feel the pinch of rising Oil prices. Nevertheless, the Australian Dollar has found support amid a relatively hawkish RBA outlook. RBA Deputy Governor Andrew Hauser noted on Thursday that trimmed mean inflation in Q3 may come out higher than expected, reinforcing the view that the central bank may be forced to hike interest rates further. Earlier this week, RBA Assistant Governor Christopher Kent said neutral interest rates might be climbing not only in Australia but also elsewhere in the world. On the other hand, surprisingly strong third-quarter GDP growth in China is another factor strengthening the Australian Dollar, given the trade ties between the two economies. However, the overall weakness of the US Dollar makes it difficult for the AUD/USD to fall further, as falling US Treasury yields and recent statements from Fed officials about not needing to raise rates at the October 27-28 meeting weigh on the dollar. Looking ahead, the market will focus on preliminary PMI releases from Australia and the US, scheduled for Friday. AUD/USD is trading at 0.7016 on the hourly chart. The pair is trading above the 100-period simple moving average (SMA) at 0.6996 and the 200-period SMA at 0.6978, suggesting a slightly supported environment, with the Relative Strength Index (RSI) reading just below 50. Upside resistance comes first at 0.7020, followed by the horizontal resistance level at 0.7037. Downside will face the 100-period SMA at 0.6996 and the horizontal support level at 0.6994.