AUD - AUD/USD analysis: RBA interest rate decision preview
The AUD/USD pair tilted higher on Monday evening as investors waited for the latest interest rate decision by the Reserve Bank of Australia (RBA). The pair is trading at 0.7045, which is slightly higher than last Friday’s low of 0.700.
RBA decision preview
The RBA started its final monetary policy meeting of the year on Monday. It will deliver its decision on Tuesday morning.
The meeting comes at a time when the Australian economy is at crossroads. On the one hand, recent data shows that the economy is bouncing back. For example, inflation has jumped to above RBA’s target of 2.0%. The labour market has also been relatively strong while recent data showed that the manufacturing and services sectors are doing well.
Most importantly, home prices in Australia have exploded to a record high. This growth is mostly because of the rising demand for Australian homes and low supplies. The easy-money policies by the RBA have also contributed to higher prices.
On the other hand, Australia’s economy is not operating at the maximum level. For one, the country has still closed its borders to most people. This has affected the expansive tourism and hospitality industries. The fast-spreading Omicron variant could make it difficult for the economy to rebound.
Therefore, AUD/USD analysts will watch this week’s RBA decision closely. The main thing to watch will be the bank’s schedule on interest rates. In the past monetary policy meetings , the bank has hinted that it will hike interest rates in 2024.
A 2024 target will be relatively odd since most central banks like the Federal Reserve and the Bank of England are expected to move as soon as in 2022.
AUD/USD forecast
The four-hour chart shows that the AUD/USD pair has risen in the past few days. It has risen from a low of 0.700 to 0.7045. Still, the price is still about 6.45% below the highest level in November this year. It also remains below the important 50-day and 100-day moving averages. It is also below the key resistance at 0.7170, which was the lowest level in September.
This rebound is not convincing. Therefore, I suspect that the pair will break out lower after the latest RBA interest rate decision on Tuesday.
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