- The RBA is welcoming a slowing of rate increases.
- Markets are expecting a 50bps rate hike from the RBA in October.
- The Federal Reserve is expected to raise rates by 75bps.
Today’s AUD/USD price analysis is bearish after the RBA meeting minutes revealed a possible pause in tightening monetary policy. As it fights to control high inflation, Australia’s central bank is adamant about raising interest rates. Still, it sees a justification for slowing the pace of increases as policy settings got closer to more normal levels.
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The Reserve Bank of Australia’s (RBA) September Board meeting minutes, which were released on Tuesday, reaffirmed that policy was not following a predetermined course and would be balanced to try and maintain the economy’s stability.
“All else equal, members saw the case for a slower pace of increase in interest rates as becoming stronger as the level of the cash rate rises,” the minutes showed.
At its September 6 meeting, the central bank increased its cash rate by 50 basis points to 2.35%, making it the fifth increase and a 225 basis point increase overall.
Markets are betting on a further half-point increase in October from the RBA to keep up with the U.S. Federal Reserve, which is expected to raise its rates by 75 basis points this week.
AUD/USD key events today
Investors will listen to RBA assistant governor Michele Bullock, who will speak later today. His speech will contain clues regarding future monetary policy.
From the United States, there will be the building permits report is expected to show a drop from 1.685M to 1.610M.
AUD/USD technical price analysis: Wobbling at a pivotal resistance level
Looking at the 4-hour chart, we see the price at the 30-SMA and RSI below 50. The downtrend has paused, and the price has pulled back to retest the 30-SMA. The pause came at the 0.6675 support level. The bears tried to break below this level twice but failed. At this point, bulls came in to push the price up to 30-SMA.
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The 30-SMA acted as resistance when the price was in a downtrend. Therefore, it will likely do the same this time, and the price will retest and possibly break below 0.6675. However, if it fails, the price will break above it and retest resistance at 0.6775.
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