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The Reserve Bank of Australia (RBA) is widely expected to announce not just a rate cut at its November 3 policy meeting but a package of measures to ease liquidity conditions. AUD/USD has dropped sharply from its early September peak around the 0.7414 level in anticipation of further easing and economists at Rabobank believe a dip towards 0.68 is on the cards.

See – Reserve Bank of Australia Preview: Forecast from six major banks

Key quotes

“If the RBA does not match expectations with the extent of the easing measures, there may be some room for a relief rally in AUD/USD. That said, due to its gas exports the AUD cannot escape being linked with the oil price which is under pressure on fears of a demand slump. Also weighing on the AUD are fresh headlines referencing tensions between Australian and China.”

“The safe haven USD is being underpinned by concerns about the impact of Covid-19 on the global economy and by fears of a contested US election. Consequently, we would favour selling rallies in AUD/USD and expect the currency pair to struggle to lift itself above the 0.70 area on a one-to-three month view with risk of a dip towards 0.68.”