• The Reserve Bank of Australia (RBA) is expected to raise rates by 50 bps.
  • The Australian dollar is holding steadily above 0.6850 on positive China data as the RBA’s decision looms.
  • Aussie dollar traders should also be aware of Iron Ore prices, tumbling almost $50 a ton from YTD highs.

The Aussie dollar pares last Friday’s losses and edges up on the second trading day of July, gaining 0.76%, amidst a quiet North American session. At 0.6864. the AUD/USD reflects an upbeat market mood in the FX space.

The AUD benefits from positive China PMIs, ahead of the RBA’s decision

European equities bounced, as well as the Asian ones, except for the China A-50 and the Hang Seng. That said, it depicts a mixed mood tilted slightly positively, maintaining the AUD bid. Also, better-than-expected manufacturing PMIs from China, mainly Caixin’s, is back in expansionary territory, despite late developments surrounding the coronavirus zero tolerance.

Another factor keeping the Australian dollar strong is the Reserve Bank of Australia’s monetary policy decision. The RBA is expected to hike 25 or 50 bps, though the base scenario for most analysts is the larger one.

In a note, analysts at TD Securities wrote, “We believe the RBA should hike the cash rate by more than 50bps at tomorrow’s meeting in light of strong domestic data prints. We had forecast a 65bps hike for the July meeting, but listening to Governor Lowe’s most recent guidance, explicitly stating the Board will discuss 25 or 50 at the July meeting, we shifted our call last week and expect the RBA to hike 50bps tomorrow.”

Elsewhere, the greenback recovered some ground, with the US Dollar Index (DXY) up 0.08%, sitting at 105.201. Australian dollar traders should be aware of Iron Ore prices, which have tumbled to $114.45 a ton from YTD highs around $160.00.

In the week ahead, the Australian economic calendar will feature the S&P Global Services and Composite PMIs for June, alongside the AIG Construction Index and the RBA’s monetary policy decision. Across the pond, the US docket will feature Factory Orders for May,  ISM Non-Manufacturing PMIs, Fed speakers, and the US Nonfarm Payrolls report for June

AUD/USD Key Technical Levels

AUD/USD

Overview
Today last price 0.6864
Today Daily Change 0.0049
Today Daily Change % 0.72
Today daily open 0.6815
 
Trends
Daily SMA20 0.6985
Daily SMA50 0.7043
Daily SMA100 0.72
Daily SMA200 0.7223
 
Levels
Previous Daily High 0.6906
Previous Daily Low 0.6764
Previous Weekly High 0.6965
Previous Weekly Low 0.6764
Previous Monthly High 0.7283
Previous Monthly Low 0.685
Daily Fibonacci 38.2% 0.6818
Daily Fibonacci 61.8% 0.6852
Daily Pivot Point S1 0.675
Daily Pivot Point S2 0.6686
Daily Pivot Point S3 0.6608
Daily Pivot Point R1 0.6893
Daily Pivot Point R2 0.6971
Daily Pivot Point R3 0.7035

 

 

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