The firm argues that AUD/USD may fall to 0.6550 after breaching the January flash crash lows today
Following the RBNZ rate cut earlier, NAB's senior FX strategist, Rodrigo Catril, says that the AUD is "certainly getting a bit of an unwelcome NZD infection". Adding that the "more aggressive, proactive RBNZ certainly ups the pressure on the RBA to do more".
However, the firm still sees the RBA only cutting rates by 25 bps again in November; arguing that "the RBA has its own approach based on its own outlook of domestic and global drivers, so the RBNZ cutting aggressively doesn't mean the RBA will follow".
That said, they still see a move downwards in AUD/USD as being "the path of least resistance" although the pair is unlikely to breach below 0.6550 "imminently".
At this stage, the monthly chart offers a better overview of AUD/USD considering that price is trading at decade-low levels:
In the big picture, there doesn't seem to be much stalling a drop towards the lows seen during the financial crisis. But there is a trendline support holding near 0.6575 so perhaps that will be the first stop to look at for any potential pause in the downside move.
