The AUD/USD price is hovering near its highest level since July 15 ahead of the Reserve Bank of Australia (RBA) interest rate decision. The pair is trading at 0.7436, which was slightly lower than Friday’s high of 0.7478.
RBA interest rate decision ahead
The biggest catalyst for the AUD/USD this week will be the RBA interest rate decision that will come out on Tuesday morning.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
Most economists polled by Bloomberg expect that the RBA will leave interest rates unchanged at 0.25%. This is in line with the bank’s previous guidance on interest rates.
Therefore, analysts will be focus on the bank’s action on the large quantitative easing program. In the previous meeting, the bank sounded open about tapering of these asset purchases.
However, a recent surge of Covid cases have left many analysts expecting that the bank will maintain the asset purchases as it observes the impact of the pandemic.
Complicating matters is a recent statement by Philip Lowe, the bank’s governor, who warned that more QE will likely have a negative impact on next year’s recovery. Instead, he has said that the best approach to deal with the new wave of the pandemic is through fiscal support.
In the past few weeks, New South Wales and Victoria have been in lockdown. This is notable since the two states account for about 55% of the country’s GDP.
As such, some analysts, especially those from Westpac, expect that the country’s growth will be muted in the second half of the year. They expect that the economy will contract by about 3% in the third quarter.
Still, on a positive note, Australian officials are no longer implementing the Covid-zero strategy. Instead, they have vowed to deal with the new wave of the virus by ramping up their vaccination efforts.
AUD/USD forecast
The AUD/USD pair is trading at 0.7437, which is slightly below last Friday’s high of 0.7478. This price was the highest it was since July. It is slightly above the upper side of the ascending channel shown in black. Also, it rose above the 25-day and 50-day exponential moving averages (EMA), which is a bullish sign.
The price is also slightly above the key support at 0.7425, which was the highest level on August 4th. Therefore, the pair will likely break out higher as bulls target the key resistance level at 0.7600.
Where to buy right now
To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:
- Etoro, trusted by over 13m users worldwide. Register here >
- Capital.com, simple, easy to use and regulated. Register here >
