Pressure mounting on the AUD

It’s all about the RBA today and it certainly seems we are in for a close call on rates.

AUD
Source: Bloomberg

Coming back from a long weekend, it’s normally a quiet start to the week but certainly not this time round. The swaps market is still overwhelmingly pointing to a rate cut (around 70%) while the majority of economists are not expecting a cut.

AUD/USD has dipped below $0.7600 and I suspect there will be some shorting interest heading into the RBA decision. Also remember the last two meetings have brought some peculiar price action for the AUD in the moments leading into the decision.

I feel the chances of a rate cut are more likely than not but either way any AUD strength will be a selling opportunity. Last week’s low was $0.7530 and that’ll be the level to look out for in the near term.

Meanwhile AUD/NZD is fast approaching parity and it seems it’s only a matter of time before this happens. On the calendar we also have February retail sales and ANZ job ads due out.

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