- Aussie heads into Tuesday’s RBA rate statement after a bullish Monday.
- Rate statement unlikely to deviate ahead of Wednesday’s GDP figures as current economic upswing may be temporary.
The AUD/USD is trading near 0.7650 after climbing steadily through Monday’s trading action, lifting nearly a hundred pips through the day. Market sentiment has swung positive for this week, spurred on by last Friday’s risk-positive US NFP figures, and helped further along by Australian Retail Sales figures, which beat expectations early Monday and kept the needle buried in risk-on mode.
Tuesday brings the Reserve Bank of Australia’s (RBA) latest interest rate decision, though with the Australian central bank widely expected to stand pat on interest rates as the Aussie economy struggles to develop growth, little movement is to be expected. Traders will be keeping a close eye on the RBA’s rate statement to see if any subtle changes are made to the prepared notes, which release with the rate decision at 04:30 GMT.
Analysts are concerned that the recent bump in Australian economic figures could be a temporary factor, and as Rabobank noted, “Household income has been growing slowly and debt levels are high”. Set against this backdrop the fact that today’s retail sales release has beaten market estimates is clearly a welcome development. That says, there is already a suspicion in the market that the strong data may be temporary since it may have reflected unseasonal hot weather which boosted activity in cafes and restaurants.”
AUD/USD levels to watch
FXStreet’s own Valeria Bednarik noted the AUD/USD’s recent bullish action, stating: “technically, the pair is trading at its highest in six weeks and around the 61.8% retracement of its latest daily decline, anticipating additional gains ahead particularly if bulls keep pushing through 0.7660. The 4 hours chart shows that the 20 SMA has accelerated north above the larger ones, also surpassing the 38.2% retracement of the mentioned decline at 0.7565, lately a comfort zone for the pair, while technical indicators are regaining the upside in overbought readings.”
Support levels: 0.7620 0.7565 0.7505
Resistance levels: 0.7660 0.7700 0.7740
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