The Australian dollar is steady on Monday. AUD/USD is trading at 0.6605 in the European session, down 0.14% on the day. Last week, the Australian dollar rose as much as 1.8% but pared most of these gains.

RBA expected to hold rates

The Reserve Bank of Australia will deliver its rate announcement early Tuesday and is widely expected to hold rates for a fifth straight time. All four major Australian banks expect the RBA to stay on the sidelines. The RBA has kept rates at a 12-year high of 4.35% and doesn’t feel confident enough to start lower rates due to sticky inflation. First-quarter inflation was stronger than expected, rising 3.6% y/y. This was down from 4.1% in Q4 2023 but above the market estimate of 3.4%.

The RBA has maintained a hawkish hold stance and Governor Bullock reiterated last week that the central bank could raise rates if inflation does not fall as expected. A rate hike is an unlikely scenario, given that the economy has been weakening, but the fact that a rate hike is on the table means that a rate cut is not around the corner and could be delayed until 2025.

Besides sticky inflation, another factor which complicating plans to lower rates is the tight Australian labor market. Unemployment is under 4% and swelling immigration means that job vacancies remain tight.

In the US, the UoM consumer sentiment index fell for a third successive month to 65.6 in June. This was down from 69.1 in May and shy of the market estimate of 72. Inflation expectations remained unchanged at 3.3%, another signal that inflation remains sticky and the Fed will have a tough time bringing inflation down to the 2% target.

AUD/USD technical

  • AUD/USD is testing resistance at 0.6617. Above, there is resistance at 0.6643.

  • 0.6590 and 0.6564 are the next support level.

AUDUSD

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Recommended Content


Recommended Content

Editors’ Picks

Australian Dollar holds gains ahead of Michigan Consumer Sentiment Index

Australian Dollar holds gains ahead of Michigan Consumer Sentiment Index

The Australian Dollar recovers its losses as soft US inflation data raises expectations of Fed reducing rates. China's Trade Balance for June came in at $99.05 billion, widening from the previous figure of $82.62 billion. Fed’s Goolsbee stated that the US economy appears to be on track to achieve 2% target inflation.

AUD/USD News

EUR/USD: The door appears open to extra gains in the near term

EUR/USD: The door appears open to extra gains in the near term

Another auspicious week saw EUR/USD trade with decent gains and extend its positive streak for the third consecutive week, including a visit to the key 1.0900 region for the first time since early June.

EUR/USD News

Gold turns bullish as US data bolster case for Fed rate cut in September

Gold turns bullish as US data bolster case for Fed rate cut in September

Gold gathered bullish momentum and climbed above $2,400 on broad-based USD weakness. Investors expect the Fed to reduce the policy rate in September after soft inflation data. XAU/USD could target a new all-time high once $2,400 is confirmed as support.

Gold News

Three reasons why Chainlink could rally

Three reasons why Chainlink could rally

Chainlink holders have consistently realized losses in July. On-chain trackers have identified accumulation by large wallet investors, however the overall trend is whales shedding their holdings. 

Read more

Trump safe after shots fired in assassination attempt at Pennsylvania rally

Trump safe after shots fired in assassination attempt at Pennsylvania rally

In a fateful incident during a rally in Butler, Pennsylvania on Saturday, Former President Donald Trump was injured in an assassination attempt. Several bullet shots were fired at Donald Trump’s rally and one such shot ripped the upper part of his right ear.

Read more

Majors

Cryptocurrencies

Signatures