• RBA expected to keep rates on hold, alongside its latest rhetoric.
  • AUD/USD correcting higher, but capped by critical resistance area and far from bullish.

 For once, speculative interest is heading into the RBA monetary policy meeting with little expectations. There were no game-changers in the Australian economy ever since last month’s meeting, therefore, the central bank is expected to remain on hold.  The market has already priced in that there won’t be any rate cuts in the upcoming months, and Governor Lowe has made it clear that QE is not in the table at the time being.

Dr. Lowe said that unconventional policies could be considered if the economic situation deteriorates to the point that rates need to come down to just 0.25%, something unlikely at the time being and with the current growth and inflation targets.

 Meanwhile, the country will release its latest Gross Domestic Product update on Wednesday, with the economy expected to have grown by 1.7% in the three months to September, following a 1.4% gain in Q2. Growth figures have more chances of moving the Aussie than the RBA.

Trade tensions mount

Meanwhile, upbeat Chinese data overshadowed trade concerns. Tensions mounted after US Ross said that US President Trump will increase tariffs if there’s no trade deal. Earlier in the day, China suspended a US military visit to Hong Kong, and also announced sanctions against several US non-government organizations for encouraging protesters. Even further, Trump announced tariffs on base metals’ imports coming from Argentina and Brazil. The news weighed on the greenback, alongside with poor US data, pushing AUD/USD higher ahead of the RBA.  The central bank’s decision could be a reality check for Aussie bulls.

AUD/USD Technical Outlook

The AUD/USD pair is heading into the release trading above the 0.6800 figure, although the advance seems just corrective on the broader perspective, as its trading around the 38.2% retracement of its November slump.

The daily chart also shows that the rally stalled around the 20 and 100 DMA, both converging with the mentioned Fibonacci resistance. Technical indicators, in the meantime, recovered within negative levels, with the RSI now challenging its mid-line, not yet in positive ground.

The pair could extend its recovery up to 0.6862, the 61.8% retracement of the mentioned slump, yet gains beyond this last seem quite unlikely, as well as chances of a hawkish RBA. The positive momentum should fade if the pair returns to levels below the 0.6800 figure, while bears could take over on a break below 0.6758, the monthly low.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD stays below 1.3350 on poor UK PMIs

GBP/USD hits fresh session lows of 1.3335 following an unexpected drop in the UK's Preliminary Manufacturing and Service PMI reports. However, the downside appears capped amid growing Brexit optimism. 

GBP/USD News

EUR/USD keeps range around 1.1130 on downbeat PMIs

EUR/USD trims gains to trade near 1.1130 region after the sentiment around the euro was dented by the disappointing German and Eurozone Preliminary Manufacturing PMIs. Trade concerns also keep the gains limited. 

EUR/USD News

UK Elections and US-China trade: Removing Risk Factors

Following the euphoria over the decisive UK election result and the US-China "Phase 1" trade deal markets look primed to end the year on a positive footing. Two of the major risk factors threatening to detail market sentiment into year end have at least been lifted.

Read more

Gold consolidates in a range, flat-lined around $1475 level

Gold extended its sideways consolidative price action through the early European session on Monday and remained confined in a narrow trading band near the $1475 region.

Gold News

USD/JPY clings to modest gains, just below mid-109.00s

The USD/JPY pair edged higher on the first day of a new trading week, albeit lacked any strong follow-through and remained well within the previous session's trading range.

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures