- The Reserve Bank of Australia kept rates at 4.35 percent on Tuesday.
- Inflation in Australia is 3.6%, well above the central bank’s target.
- Economists expect the US retail sales figure to be 0.3%.
The AUD/USD outlook is slightly bullish as the Aussie rises after the Reserve Bank of Australia’s policy meeting. Meanwhile, the dollar remained steady as investors waited for the US retail sales report to provide more clues about the state of the economy.
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The Reserve Bank of Australia kept rates at 4.35 percent on Tuesday, but discussed the possibility of a rate hike. Inflation in Australia is 3.6%, well above the central bank’s target. Therefore, the RBA has remained cautious, and markets expect it to be among the last central banks to start lowering interest rates. RBA Governor Bullock said that recent data has raised fears that inflation is still high.
After the decision, the Aussie rose slightly before reversing. At the same time, bets on an RBA cut in December fell from 65% to 44%.
Meanwhile, the US dollar was steady as investors awaited the US retail sales report, which will show the state of consumer spending. Economists expect the figure to be 0.3%, up from 0.0% the previous month. If this is the case, it will indicate an increase in consumer spending, which is likely to boost the dollar.
At the same time, market participants are expecting speeches from several Fed officials who will give clues about the prospects for interest rate cuts. Last week, Fed rate cut expectations fluctuated as data showed easing inflation, while the Fed maintained a cautious outlook, forecasting just one rate cut this year.
AUD/USD key events today
- Basic US retail
- retail in the US
AUD/USD Technical Outlook: Price is approaching the 0.6580 support range.
On the technical side, the AUD/USD price is consolidating between the support level at 0.6580 and the resistance level at 0.6701. Bears are in the lead in this area as the price is trading below the 30-SMA. At the same time, the RSI is below 50, in bearish territory. Furthermore, price is closer to range support than range resistance.
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Currently, the bulls are testing the 30-SMA resistance, but have made a large wick, indicating a bounce. Therefore, there is a good chance that the price will fall to retest the range support. A break below this level would allow the price to start moving lower.
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