AUD/USD: drops like a stone with commodities

AUD/USD has dumped on the back of hawkish minutes from the FOMC meeting in April.

FOMC minutes: June hike 'likely'

The minutes showed that most officials saw June hike 'likely' if economy warranted. This fuelled speculation, especially after the recent surprise spike in CPI and hawkishness from Fed speakers Lochkart and Williams yesterday that June is indeed a live meeting. However, the minutes also highlighted risks and some cited Brexit and China as risks along with the projection for inflation that were still judged as weighted to the downside, but that was before the better than expected CPI results earlier this week.

AUD/USD has been hit hard as being linked to the commodity bloc that tends to suffer on the back of a stronger dollar. Coupled with an air of dovishness from the RBA, albeit the minutes saying that the recent rate cut was a close call, the divergence between the two Central Banks and the already unfavourable high value of the Aussie, exposes the downside further, despite AUD/USD already falling from 0.7718 to a new low 0.7224 today so far at time of writing.

AUD/USD levels

AUD/USD now broken below the 200 day ma at 0.7257 and is a handful of pips away from the key 0.7213 (61.8% retracement). A break there is going to expose
16th Dec lows of 0.7096 as a credible target.

On the upside, analysts at Commerzbank suggested that rallies should terminate circa 0.7430/0.7530. "Initial resistance lies 0.7477 (24th March low). The market remains negative while below 0.7717, the 3 rd May high."