According to the head of the RBA, Philip Lowe, there are still "no serious arguments in favor of tightening monetary policy in the short term." In his opinion, "before the increase in interest rates will take some time." In a recent House Standing Committee hearing, Lowe said it was likely that if the economy followed the bank's forecasts, a rate hike would be on the agenda as early as the end of this year. However, this does not mean that it will be upgraded soon after. While the Australian economy is coping with the coronavirus pandemic, there is currently no evidence of over-stimulation, according to Philip Lowe.
Thus, unlike the Fed, the RBA will for the time being maintain a soft course of its monetary policy, which means that the main driver of the AUD/USD dynamics is the strengthening of the US dollar.
Today's decline in prices for oil and other commodities against the backdrop of falling global stock indices is also putting pressure on commodity currencies, one of the main of which is the Australian dollar. And as we can see, AUD/USD is actively declining today, reaching an intraday low near 0.7085. A breakdown of this local support level will lead to further decline with the nearest target at the lower border of the descending channel on the weekly chart, passing through the level of 0.6970. AUD/USD remains in the zone of the global bearish trend. Therefore, short positions should be preferred.
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