AUDUSD: Will Glenn Stevens give the dog a Jawbone?

RBA Gov Glen Stevens is due to speak in Sydney tomorrow, and with a shortfall of domestic news traders will be listening out for further clues regarding interest rates and the "historically high" A$.

The markets are now pricing in a 7% chance of a rate cut following a rising unemployment and jawboning from RBA Gov Glenn Stevens. However I doubt we'll be seeing any rate cut soon as RBA remain within a 'neutral' stance and continue to reiterate the message "The most prudent course was likely to be a period of stability in ­interest rates." Whilst Stevens has hinted he would like a lower A$ (and expects we will see one) he has steered away from more stern words of intervention, and I expect this to be the case tomorrow.

Of course if there are talks of the high A$ or stern words relating to their "extra ammunition" then we should see A$ firmly back below 94c.

However over the coming weeks whilst both the FED and RBA are reluctant to outline a clear timetable of interest rate changes then AUDUSD will continue to frustrate position traders in seek of that next home run.

The US will release housing and inflation data on Tuesday night to provide further direction for the A$. Existing home sales are forecast at an 8-month high whilst Core CPI is expected to rise a further 0.2%. If these come to fruition then I'd expect to see A$ back below 94c.

There is a bed of support between 0.9362-68, but a break below here should then target last weeks lows at 0.9328. However this is where it begins to get more interest due to the price action at these levels last week: The 2-day decline from the 0.95c highs were the most bearish since Jan, yet last Wednesday the A$ bulls managed to keep above this low by 0.7 pips and close the session with a bullish pinbar. Last Friday then saw a bullish engulfing candle close to a 5-day high, and remain above the 50-day eMA. Tis paints a more bullish picture near-term and raises the potential for a break back above 94c.