The greenback continued to fall against all its major counterparts in the overnight sessions as traders jettisoned the dollar on debt concerns. Meanwhile the Aussie surged on upbeat remarks made by RBA Governor Glenn Stevens. The greenback continued to fall against all its major counterparts in the overnight sessions, with the Aussie toping the performance charts, advancing more than 0.90% at the open of North American trade. Comments made by central bank governor Glenn Stevens cited a more upbeat outlook for the continent-nation noting that household spending is likely to rebound, “at some point” as consumer confidence improves. He stated that, “As a better sense of the degree of persistence is gained, people will probably be more confident to spend that perhaps they are just now.” The general optimistic tone struck by the RBA governor supported the Aussie which briefly topped the 50% Fibonacci extension taken from the July 18th and 25th troughs at 1.0950 before paring some of the gains early in US trade. A daily chart shows the pair breaching the key 38.2% Fibonacci extension at 1.0880 and suggests the Aussie may have further gains in store. Risk to the recent advance comes overnight with the 2Q CPI data. Consensus estimates call for a headline print of 3.4% y/y, up from the previous read of 3.3% y/y. A weaker than expected read could see interest rate expectations fall further with Credit Suisse overnight swaps already factoring in more than 40 basis points in rate cuts for the next twelve months. Interim support for the AUD/USD holds at the 38.2% Fibonacci extension at 1.0915 with subsequent floors seen at the 23.6% extension at 1.0870 and 1.0840. Topside targets are eyed at 1.0965 backed by the 61.8% extension at 1.0990 and 1.0120.

Source