AUD/USD: RBA statement in focus to confirm recent bearish bias

AUD/USD flirts with 0.7100 on Friday start.
RBA Governor’s shift and overall risk-off sentiment has negatively affected the Aussie off-late.
The RBA’s quarterly monetary policy statement is in light for fresh impulse.

Anil Panchal FXStreet

The Australian Dollar trades little changed around 0.7100 against the USD at the start of Friday’s Asian session. The AUD/USD pair hasn’t been performing well in last two days as doubts over the future policy moves of the Reserve Bank of Australia (RBA) and overall risk-off sentiment disappoints Aussie traders. Looking forward, investors await quarterly monetary policy statement from the Australian central bank to confirm latest bearish bias.

The AUD slumped on Wednesday after the RBA Governor Phillip Lowe took a U-turn from the bank’s long-standing hawkish bias to allotting equal probabilities to any side policy shift. The currency, often considered as barometer of risk, stretched its weakness to the next day as pessimism surrounding US-China trade deal and the European Commission’s downgrade to the Eurozone growth forecast favored risk off.

On Thursday, White House Adviser Lawrence Kudlow dimmed prospects of successful trade deal between the US and China as he said there are 'sizable distance' between the two giants over the talks. The same can also be known from the early Friday’s Reuters report that mentions the US President Donald Trump’s refrain to meet his Chinese counterpart Xi Jinping before the deadline of 90-day truce period, i.e. March 01. Adding to the risk aversion was the news that European Commission cut Eurozone growth forecasts for the year 2019 and 2020.

While market has already reacted to the shift in risk sentiment and signal for a dovish move by the RBA that has been supporting rate hike to be their next move, the quarterly monetary policy statement from the Australian central bank will be observed closely in order to confirm the recent bearish bias conveyed by the Governor Lowe.

Should the central bank reiteration follows Lowe’s remarks considering the challenges to Australia’s largest trading partner China, the chances are high that the AUD/USD may witness further downside.

AUD/USD Technical Analysis

The AUD/USD pair needs to slip beneath the 0.7070 support level in order to aim for the 0.7015 and the 0.6980 rest-points.

On the upside, the 0.7150 and the 0.7200 may offer immediate resistances to the pair.

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.

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