The AUDUSD is going to have a pretty busy week as the second major news release for the week is set to be released at 3.30 am GMT on Tuesday December 3. This is when the Reserve Bank of Australia (RBA) will release its last interest rate decision for the year, as well as the accompanying rate statement. The market consensus is for the RBA to leave rates unchanged at 0.75%.
Many market players are already factoring in at least two rate cuts for early 2020, which could be accompanied by a version of quantitative easing. However, traders and market watchers will be looking out for what the RBA will say that could provide clues on the timing of such a decision as well as the extent of any stimulus package.
The AUDUSD will be the preferred currency of trade, and traders will be looking for clues in the statement for the direction the RBA would take in 2020. The RBA Governor has in previous statements, voiced out a veiled opposition to quantitative easing. If he puts out a similar stance in the rate statement, this could be interpreted as being AUD-positive. If there is a hint at keeping 0.25% as a possible target benchmark for rates to shore up the Australian economy, this could be interpreted as AUD-negative.
Aside from the RBA statement, AUDUSD may be affected by happenings on the US-China trade front. Reports from Reuters just filtering in shortly before publishing of this article have quoted a key White House Advisor Kellyanne Conway as saying that the Phase 1 deal was being written up.
If this report is true and the RBA delivers an AUD-positive statement, we could see AUD break out of the ascending channel border to target 0.70268 in the near-term, with 0.71718 in the horizon if risk-on sentiment persists.
An AUD-negative rate statement could push the pair in a breakdown of the channel, targeting the most recent lows of August 7 and October 1 at 0.66742.More content