AUSTRALIAN DOLLAR OUTLOOK FOCUSED ON UPCOMING RBA RATE DECISION: AUD/USD LEVELS TO WATCH
- Australian Dollar edges higher headed into the RBA interest rate decision due on Tuesday
- The Aussie could advance further against key FX peers if the RBA stands pat on rates
- AUD/USD, AUD/JPY, and AUD/NZD also weighed on by shifts in broader market sentiment
The Australian Dollar strengthened on Monday with AUD price action gaining ground largely thanks to an improvement in risk appetite. Aussie bulls are also standing their ground ahead of the RBA decision due Tuesday, 06 October at 03:30 GMT. According to futures pricing, there is currently a 66% probability that the Reserve Bank of Australia cuts its policy interest rate at the upcoming meeting.
This dovish tilt priced by markets opens up the door to the possibility for a bullish reaction by the Australian Dollar if the RBA leaves its overnight cash rate target unchanged at 0.25%. Also, after expanding its Term Funding Facility at the last RBA meeting, it seems likely that the central bank will stay sidelined this go-round.
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AUD/USD PRICE CHART: DAILY TIME FRAME (11 JUNE TO 05 OCTOBER 2020)
Looking beyond the RBA decision on deck, the direction of the Australian Dollar could get strong-armed by other fundamental drivers weighing materially on broader market sentiment, such as coronavirus and fiscal stimulus headlines.
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That said, judging by AUD/USD overnight implied volatility, the Aussie-Dollar is estimated to maintain a 96-pip trading range on Tuesday with a 68% statistical probability. In other words, spot AUD/USD price action is likely to fluctuate between 0.7131-0.7227 over the next 24-hours, which might serve as potential levels of technical support and resistance, respectively.
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