AUD/USD clings to 0.6750 ahead of second-tier AU data with all eyes on RBA
- AUD/USD trades catch a breath ahead of the key day.
- Manufacturing gauges and housing data to precede the all-important RBA decision.
- The RBA Governor’s speech, trade/political headlines will entertain markets afterward.
With the markets settling their eyes on the Reserve Bank of Australia’s (RBA) rate decision, the AUD/USD pair stays modestly changed to 0.6750 during the early Asian session on Tuesday.
Alike other Antipodeans, the Aussie pair has been under pressure mainly because of the US Dollar (USD) strength and the US-China trade jitters, which in turn restricted the quote from cheering upbeat manufacturing activity numbers from the largest customer China.
The King Dollar holds its head high as traders rush to the US currency amid times of uncertainty considering as the safest investment. Latest upbeat comments from the US Federal Reserve officials added a sentiment to make it the cleanest shirt in the dirty laundry.
Investor sentiment was little changed by the latest news that Australia's Prime Minister Scott Morrison is also involved in the case that has its roots from Robert Mueller investigation.
While September month data of AiG Performance of Mfg Index, Commonwealth Bank Manufacturing PMI and Building Permits from Australia could offer intermediate moves to the pair, market players are more interested to look forward to the RBA’s interest rate decision and the rate statement up for grabs at 04:30 GMT.
Most market consensus favors 25 basis points (bps) cut to the RBA’s Cash Rate and hence the central bank’s signals to future such actions will be closely observed. “We expect that the Bank is likely to cut the cash rate by 25bps to 0.75%. Its forecasts for Q2 GDP fell short of Aug SoMP forecasts, surprising the RBA. With the RBA now playing catch-up to achieve its year-end ’19 and 2020 GDP forecasts that are premised on a cut by Nov, and signs that wages growth has stalled, the RBA need not wait to cut. RBA Gov Lowe is set to deliver remarks at a RBA Board Dinner with the business community in Melbourne. The subject of his speech has not been disclosed,” says TD Securities ahead of the event.
Following the RBA, the US ISM Manufacturing Purchasing Manager Index (PMI) data and trade news can make the markets alive while China is off for a week.
Technical Analysis
The pair’s sustained trading below 23.6% Fibonacci retracement of July-August downside, at 0.6772, keeps portraying its weakness that can drag it further south to 0.6740/35 and 0.6700 rest-points. However, an upside clearance of 0.6772 can trigger fresh upside to 21-day simple moving average (SMA) level around 0.6810.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
