AUD/USD is struggling in the face of escalating U.S.-China trade tensions nB9N1TL03N and now faces further trouble with the approaching RBA meeting, which could hasten a drop to 0.73 support if policy makers take a more dovish tone than expected. AUD/USD, a proxy for China, has lost ground today as USD/CNH retraced much of Friday's PBOC-induced slide.
Though the RBA is not expected to move rates, it is likely to lean in a more dovish direction due to the recent downside surprise in already below-target inflation as well as the ongoing trade dispute. The question is how dovish.
If it surprises markets, AUD/USD could head for support near 0.7300.
A break there opens the door to 0.7110/60.
Traders should also be wary of the RBA's SOMP on August 10, with particular focus on new assessments for Australian growth and inflation.
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