RBA Preview: AUD/USD to break above 0.74 on a positive statement

The Reserve Bank of Australia (RBA) is having a monetary policy this Tuesday. It seems that the central bank will offer a dovish statement, which will have a limited surprise factor. Meanwhile, the aussie is bullish and poised to break above 0.7400, FXStreet’s Chief Analyst Valeria Bednarik reports.

More – RBA Preview: Five major banks expectations

Key quotes

“The RBA is expected to leave the monetary policy unchanged, keeping the cash rate at a record low of 0.25%. Policymakers are expected to keep conducting market operations to provide liquidity to the banking system.”

“The Australian economy was baring pretty well with the pandemic, until a second wave hit the country, leading to a lockdown in  Victoria’s region. On average, the area represents 23% of the total GDP, which means that this latest lockdown will likely imply a steeper setback in growth in Q3.”

“The AUD/USD pair trades firmly above the 0.7300 level, not far from the year high at 0.7380 reached at the beginning of the week. The advance was mostly backed by the broad dollar’s weakness, which persists. In this scenario, a mildly dovish RBA may result in a temporal setback in AUD/USD. However, bulls may take their chances at lower levels, once the dust settles.”

“The AUD/USD pair may turn bearish on a break below the 0.7300 level, but the RBA needs to be a dovish shock for that to happen. The central bank is not expected to be optimistic, but in the case the statement is perceived as positive, there’s room for an advance towards the 0.7400 level and beyond.”