- RBA policymakers considered a rate hike at their last meeting.
- Markets are implying an 84% chance of an RBA rate cut in December.
- Markets estimate a 75.5% chance of a 25 basis point Fed rate cut in September.
The AUD/USD outlook shows bullish enthusiasm, with the Aussie climbing after minutes from the Reserve Bank of Australia’s policy meeting. Meanwhile, the US dollar weakened as investors bet on a September rate cut ahead of Powell’s Jackson Hole speech.
-Are you interested in learning more about the Forex Signal Telegram Group? Click here for details –
Minutes from the RBA’s latest meeting, released on Tuesday, showed that policymakers almost raised rates due to high core inflation. However, after discussing the risks, they decided to keep rates unchanged. The RBA tries to balance inflation and the labor market. Higher rates could threaten the employment sector and hurt the economy. Meanwhile, the central bank will be forced to delay rate cuts if inflation remains high.
The minutes dashed hopes for a short-term rate cut. Still, markets imply an 84% chance of a rate cut in December and another in February next year.
Meanwhile, the outlook for the Fed is different. Inflation eases as expected. At the same time, even though the economy is slowing, pockets of strength remain. Therefore, the Fed is ready to cut rates by a quarter point in September. Markets are predicting a 75.5% chance of a 25 basis point rate cut.
However, this perspective could change when Powell speaks at a symposium in Jackson Hole. If it signals a rate cut, expectations will rise. On the other hand, if he remains cautious, rate cut bets may fall.
AUD/USD key events today
This could be a quiet day for the pair as there won’t be any key reports from the US or Australia.
AUD/USD Technical Outlook: The bullish trend is approaching the 0.6800 level
On the technical side, the AUD/USD price broke above the 0.6700 resistance level. The bullish bias is strong as the price has risen well above the 30-SMA. At the same time, the RSI is in the overbought region, indicating massive bullish momentum.
-If you are interested in Forex day trading, please read our getting started guide-
After such sharp moves, price usually pulls back to retest the 30-SMA before the bulls regain strength. If that happens, AUD/USD falls below 0.6700 before continuing higher. On the other hand, it could pause above 0.6700 as the SMA catches up. The next target for the bulls is at the 0.6800 level.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
