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  • AUD/USD is trading in a relatively tight trading range below 0.7200.
  • Wall Street looks to open in the positive territory.
  • US Dollar Index edges lower toward 93.50 on Monday.

After gaining more than 100 pips last week, the AUD/USD pair continued to edge higher on Monday but doesn’t seem to be having gathered enough bullish momentum to test 0.7200 so far. As of writing, the pair was up 0.27% on the day at 0.7181.

Upbeat data support AUD ahead of RBA meeting

In the early trading hours of the Asian session, the data from Australia showed that the business activity in the service sector expanded in September with the Commonwealth Bank Services PMI rising to 50.8 from 50 in August. Additionally, the National Australia Bank’s Business Conditions Index improved to 0 from -6 and provided an additional boost to the AUD.

On the other hand, the upbeat market mood is weighing on the safe-haven greenback on Monday. With the S&P 500 futures rising more than 0.6% and pointing out to a strong start in Wall Street, the US Dollar Index is down 0.3% on the day at 93.52. Later in the day, the IHS Markit and the ISM will both release their Services PMI reports. 

During an interview with Fox Business Network, White House Chief of Staff Mark Meadows said that US President Donald Trump’s condition is improving and added that it will be up to his doctors to decide whether he can be discharged later in the day.

If risk flows continue to dominate financial markets in the second half of the day, AUD/USD could start pushing higher toward 0.7200. However, investors might opt out to stay on the sidelines while waiting for the Reserve Bank of Australia (RBA) to announce its Interest Rate Decision and release the Rate Statement.

According to a recently conducted Reuters poll, 25 of the 36 surveyed economists expect that the RBA will leave its policy rate unchanged. ANZ Job Advertisements for September and August Trade Balance data will be featured in the Australian economic docket as well.

Technical levels to watch for