Traders cautious ahead of the RBA meeting

The local currency will be key this week as investors, analysts and the market debate on whether we’re set for another RBA rate cut.

AUD
Source: Bloomberg

The market and economists both expect a cut while investors seem somewhat unconvinced. Following the big surprise in April, investors are unconvinced that market pricing and economist calls will come to fruition. A combination of surprises in inflation and jobs data seems to have been enough to put doubt in investors’ minds that we will see a rate cut. From a price action perspective, there was a nice little uptrend forming from the AUD/USD mid-April lows in the $0.7550 region. This kept the price action supported and saw the pair rally to just over $0.8000 towards the end of May. The pair has since pulled back rapidly heading into the RBA meeting and seen this uptrend broken. The break occurred at around $0.7850 and saw the pair go down to test support in the $0.7800 region. This level is the 50% retracement of the April rally and is currently supported ahead of $0.7750 which is the 61.8% retracement of the move. These levels could come into play this week considering how busy the economic calendar is. 

 

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