AUD/USD eyes RBA minutes

The Australian dollar continues to drift as we start the new trading week. In Monday’s European session, AUD/USD is trading at 0.6438, up 0.11%.

The Reserve Bank of Australia releases its minutes of this month’s meeting. The RBA extended a pause in rates for a third month, holding the official cash rate at 4.10%. This was ex-Governor Philip Lowe’s final meeting. Lowe noted that “passed its peak” but was “still too high and will remain so for some time yet”, as he kept the door open to further rate hikes. The markets are more dovish and are looking ahead to the RBA trimming rates sometime in 2024. Investors will be looking for clues in the minutes with regard to future rate moves.

Michelle Bullock takes over today as the new Governor of the RBA. Bullock is not expected to make any major policy shifts and has stated that the upcoming rate decisions will be data-dependent. The new governor will have her hands full with implementing major changes at the bank, after a government committee urged an overhaul at the central bank which is intended to streamline the Bank’s activities and create greater transparency.

The US ended last week on a mixed note. The Empire State Manufacturing Index surprised to the upside, jumping to 1.9 in September from -19 in August, above the market  consensus of -10. The UoM consumer sentiment index slowed to 67.7 in September, down from 69.5 in August and shy of the market consensus of 69.1 points. Inflation Expectations fell to 3.1% in August, down from 3.5% in July and the lowest level since March 2021. This is another sign that inflation is weakening and  supports a pause at the Federal Reserve meeting on Wednesday. The markets have priced in a pause at 99%, according to the CME FedWatch tool, up from 92% one week ago.

AUD/USD technical

• AUD/USD tested support at 0.6428 earlier. The next support line is 0.6381.

• 0.6477 and 0.6524 are the next resistance lines.