AUDUSD TO 0.653000 TOMORROW??
Trading Plan
1. Baseline Scenario:
- Macro-Fundamental Bias Dovish. The market expects the Federal Reserve to continue lowering interest rates, with a 66.5% chance of a 25 basis point rate cut in December. This expectation is driven by the Fed's recent decision to lower the federal funds rate to 4.50% - 4.75% and ongoing efforts to support maximum employment and achieve the 2% inflation target.
- Short Term Sentiment Bias: Dovish. Current sentiment is driven by the recent decline in the US 10-year Treasury yield to 4.2%, reflecting market expectations of further rate cuts and stability under the new Treasury Secretary, Scott Bessent. Additionally, the PCE inflation data aligning with expectations has reinforced the view that the Fed's current policy stance is appropriate.
2. Risk Event Baseline:
- Market Expectations:
- ISM Manufacturing PMI: Forecast: 47.7 | Previous: 46.5
- ISM Manufacturing Prices: Forecast: 55.2 | Previous: 54.8
3. Surprise Scenarios:
- Negative Surprise: 7If the ISM Manufacturing PMI or ISM Manufacturing Prices data come in below expectations, it could lead to further USD selling pressure. This scenario supports long positions on AUD/USD, as the AUD is likely to strengthen against a weakening USD.
1. Baseline Scenario:
- Macro-Fundamental Bias Dovish. The market expects the Federal Reserve to continue lowering interest rates, with a 66.5% chance of a 25 basis point rate cut in December. This expectation is driven by the Fed's recent decision to lower the federal funds rate to 4.50% - 4.75% and ongoing efforts to support maximum employment and achieve the 2% inflation target.
- Short Term Sentiment Bias: Dovish. Current sentiment is driven by the recent decline in the US 10-year Treasury yield to 4.2%, reflecting market expectations of further rate cuts and stability under the new Treasury Secretary, Scott Bessent. Additionally, the PCE inflation data aligning with expectations has reinforced the view that the Fed's current policy stance is appropriate.
2. Risk Event Baseline:
- Market Expectations:
- ISM Manufacturing PMI: Forecast: 47.7 | Previous: 46.5
- ISM Manufacturing Prices: Forecast: 55.2 | Previous: 54.8
3. Surprise Scenarios:
- Negative Surprise: 7If the ISM Manufacturing PMI or ISM Manufacturing Prices data come in below expectations, it could lead to further USD selling pressure. This scenario supports long positions on AUD/USD, as the AUD is likely to strengthen against a weakening USD.
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