RBA's Harper jawbones AUD/USD, 10-yr yield comes to the rescue

AUD/USD fell to a session low of 0.8011 after RBA board member Ian Harper said the economic growth is too weak to justify the rate hike.

Harper blamed the broad based USD weakness for the appreciation in the AUD/USD exchange rate. The currency pair bottomed out at 0.7329 in May and since then has rallied more than 9%. The latest cyclical high stands at 0.8125 levels.

The jawboning effort has failed as the FX space is being guided by the bond yield spread/differential. The Aussie 10-year bond yield remains on the front foot despite dovish comments from Harper. At press time, the yield traded at 2.682%; up 4 basis points on the day. Meanwhile, its US counterpart is down one basis point at 2.16%.

Thus, the drop in the AUD/USD to a session low of 0.8011 was short lived. Currently, the spot is trading around 0.8028 levels.

AUD/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes-

"The 4 hours chart for the pair puts the risk towards the downside as the price develop below its 20 SMA ever since the week started, with an advance up to its meeting selling interest, whilst in the same chart, the RSI indicator has resumed its decline, currently around 49. The  Momentum indicator aims higher but within negative territory,  with the pair only with chances of turning short term bullish on a steady advance beyond 0.8060, the immediate resistance."