AUD/USD Climbs Back Toward $0.6500 as RBA Minutes Push Rate-Cut Bets Lower
During Tuesdays European session, the AUD/USD suddenly stabilized and began climbing back towards $0.6500...
Quick overview
- The AUD/USD stabilized and climbed towards $0.6500 after the RBA's meeting minutes indicated no immediate interest rate cuts.
- The RBA is maintaining a cautious stance on interest rates, currently at 3.6%, while monitoring the labor market and inflation.
- The US Dollar weakened ahead of the upcoming Nonfarm Payrolls data, with traders speculating on potential rate cuts by the Federal Reserve.
- Market focus is on Australia's Q3 Wage Price Index and the US NFP report, which could significantly influence the AUD/USD direction.
During Tuesdays European session, the AUD/USD suddenly stabilized and began climbing back towards $0.6500 after the Australian Dollar took a bit of a boost from the release of the Reserve Bank of Australia’s (RBA) November meeting minutes – Policymakers gave no signs that they’re in a rush to cut interest rates which helped steady the currency after last weeks downturn.
RBA Stays Patient, Leaves Policy Flexible
The minutes showed the RBA keeping interest rates the same as consumer spending is still holding up okay and inflation remains a bit higher than it wants it to be. Officials said that while the interest rate is locked at 3.6% for the second month in a row, they’re still open to cutting it if the labour market starts to slow down or the economy slows right down. For now its cautious but not as dovish as people might have thought
US Dollar Softens Before NFP as Rate Expectations Shift
The US Dollar failed to make a gain and started going down as traders were all waiting to see Thursdays delayed US Nonfarm Payrolls (NFP) data. With job numbers being a big part of what the Federal Reserve will be looking at next, markets are slowly starting to think that the Fed might actually ease up on rates, and the CME FedWatch tool shows that theres around a 43% chance of a 25 bps cut in December – this all comes down to uncertainty around the US labour market.
Wage Data and US Jobs Report to Drive AUD/USD
Now everyone is waiting to see what Australias Q3 Wage Price Index is going to be on Wednesday – most people expect it to be up by 0.8% for the quarter and 3.4% for the year. A strong reading might just help the RBA keep its steady policy going while a weak reading might start people thinking about cuts. And of course the US NFP report is going to be the big driver for the USD so one of these two events could go a long way to determining where the AUD/USD goes next.
AUD/USD Price Forecast – Technical Analysis
The AUD/USD is hovering around $0.6500 after a bit of a rebound from the $0.6464 support level, which is acting as a bit of a floor because its just above the ascending trendline that the price has been following. But overall the picture is still pretty bearish because the price is still being capped by that big descending trendline from the Sept peaks. The pair is also still below the 20EMA on the 4hr chart which is showing that intraday momentum is pretty weak
The RSI is sitting around 42 which means that there is a bit of bearish pressure but not enough to be totally convinced yet. If the price holds above $0.6464 then there is still room for a bit of a short correction up to $0.6572, and if buyers do start to get on board then $0.6613 is the next place to look. But if the trendline does fail then all of a sudden there are downside risks down to $0.6415 and $0.6372.
For now the AUD/USD is still just sort of drifting along – it will be interesting to see what the wage data and Thursdays US NFP release have in store.
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