- China has launched financing schemes to support its stock market.
- Treasury yields rose as bets on a Trump victory rose.
- Markets estimate a 26% chance of an RBA rate cut in December.
The AUD/USD forecast shows a rebound in the dollar as markets turn their focus back to the upcoming US presidential election. Meanwhile, a senior RBA official noted that Australia’s labor market had surprised the central bank, which could mean further delays in rate cuts.
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The dollar rallied on Monday after ending Friday’s slide on rising risk appetite. China has launched financing schemes to support stock markets, boosting commodity currencies like Australia’s. Economic stimulus in China is improving the outlook for demand for commodities like gold and oil.
By Monday, however, the dollar had recovered as focus shifted to the November presidential election. Treasury yields are rising as bets on a Trump victory increase. A Trump victory is bullish for the dollar as his policies are likely to increase inflation and interest rates.
This month, the dollar rose over 2.5% on better-than-expected economic data. At the same time, the outlook for Fed rate cuts has changed, with markets now expecting a gradual pace. Currently, bets show a 95% chance of a rate cut in November.
Meanwhile, the Australian dollar jumped last week after domestic data revealed a strong labor market. September was the sixth month in which jobs beat estimates. Namely, on Monday RBA Deputy Governor Andrew Hauser said that the report was a surprise for the central bank. He noted, however, that there could be many reasons behind the strong labor market. Therefore, the central bank would not depend only on those data to decide on policy. Nevertheless, markets are predicting less chance of a 26% rate cut in December.
AUD/USD key events today
Markets are not expecting critical reports from Australia or the US. Therefore, traders will continue to speculate on the upcoming US election.
AUD/USD Technical Forecast: Bears struggle for control at 30-SMA
From the technical side, AUD/USD the price is falling after failing to sustain a move above the 30-SMA. The bias is bearish as the price is trading below the SMA with the RSI below 50. However, the bearish momentum has eased as the price is holding close to the SMA.
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At the same time, the RSI made a bullish divergence, signaling an impending reversal. If this signal plays out, the price will break above the 0.6700 level and the 30-SMA. Otherwise, the bears will revisit the 0.6650 level.
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