RBA Preview - What to Expect in AUD/USD?
AUD/USD was bid on broad US dollar weakness overnight after Yellen spoke on the nonfarm payrolls result and monetary policy in a speech in Philadelphia. The risk now comes with the RBA meeting today.
AUD/USD was up from 0.7324 to 0.7380 on Yellen who was generally upbeat, but she gave cause for concern leading to a sell-off in the US dollar. For today in Asia, markets will be reminded that the Q1 GDP report in Australia showed promising signs due to the strength in net exports, but the RBA will need to take note of the absence of growth in domestic demand while inflation was reported with similarities in the Q1 CPI numbers without further causes for concern. The RBA is widely expected to remain on hold.
Having rallied through the 23.6% retracement at 0.7308 in a continuation of this near-term reversal taking place. We took out the post US jobs report rally high at 0.7360 and scored 0.7380. The next level up to watch is the 0.7430 level and 4th May consolidation zone. "The 0.7400 area beckons as bullish US dollar bets are abandoned in the wakeof Friday's weak US labour data," suggested analysts at Westpac earlier, adding, " Multi-month we expect the US dollar to eventually find its feet and help drag AUD/USD lower. In addition, further RBA easing will be a negative. We target sub-0.72."
"The overall technical stance is bullish, with scope to extend up to 0.7450, the 38.2% retracement of this year's decline," argued Valeria Bednarik, chief analyst at FXStreet. "In the 4 hours chart, the price has advanced above its 200 EMA, which further supports the upside, while the 20 SMA heads north below the current level and the technical indicators have lost upward strength in overbought levels, but remain far from suggesting an upcoming downward move. "