- The RBA opted to keep interest rates unchanged.
- The possibility of an RBA rate hike in November still exists.
- US manufacturing exhibited signs of recovery in September.
The AUD/USD outlook turned bearish when the Australian dollar reached an 11-month low after the Reserve Bank of Australia opted to keep interest rates unchanged. This marked the fourth consecutive month of rate stability. However, the central bank cautioned that additional tightening may be necessary to curb inflation within a reasonable timeframe.
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Notably, the Reserve Bank of Australia maintained rates at 4.10%. Moreover, they noted that recent data aligned with their goal to achieve 2–3 percent inflation over time while observing continued growth in output and employment.
Market expectations leaned heavily towards a stable outcome this month. However, the possibility of a rate hike in November still exists, contingent on third-quarter inflation trends. Kyle Rodda, a senior financial market analyst at Capital.com, pointed out that markets are now awaiting quarterly consumer price data.
Furthermore, Rodda stated, “If that data suggests that inflation is on track to reach 4% by the end of the year, the RBA is likely to remain on the sidelines.”
Meanwhile, according to a survey, US manufacturing exhibited signs of recovery in September, with increased production and a rebound in employment. Additionally, the survey revealed a substantial decline in factory input prices.
A series of robust US economic indicators in recent weeks has raised expectations that the Fed will keep high rates for an extended period. At the same time, several policymakers have warned of the potential for further tightening if inflation does not decelerate as anticipated.
AUD/USD key events today
Investors are waiting for one crucial report from the US today.
- The JOLTs job openings report for August.
AUD/USD technical outlook: Bears race to the bottom, hitting fresh lows.
Looking at the 4-hour chart, we see that AUD/USD has plunged to a lower low. Consequently, this decline gives the pair a strong bearish bias and signals more downside potential. Bulls attempted to take control, breaking above the 30-SMA. However, a whiplash move saw the price fall below the SMA and major support levels.
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Moreover, the RSI collapsed and currently trades in the oversold region. The price recently broke below the 0.6350 key support level, and bears are now eyeing the 0.6300 support. The bearish bias will hold if the price returns to respecting the 30-SMA as resistance.
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Saqib Iqbal
