Audusd drops as market awaits RBA decision amid rising inflation in Australia

AUDUSD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.11%	-7.5 Pips
Week to-date	-0.24%	-16.1 Pips
November	0.21%	13.9 Pips

Upcoming key events (London Time)

Tue 12:00 AM USD Presidential Election
Tue 03:30 AM AUD RBA Monetary Policy Decision (Cash Rate Target)

What happened lately

In the United States, the Census Bureau reported that new orders for manufactured goods saw an improvement in September with a decrease of 0.5%, compared to a revised decrease of 0.8% in August. This indicates a slight recovery in the manufacturing sector, suggesting a slight uptick in economic activity and demand for manufactured goods. This improvement, albeit slow, could imply a stabilization phase where manufacturers might start experiencing better demand conditions.

In Australia, the TD Securities inflation measure revealed that the inflation rate over the 12 months up to October has increased to 3%, up from 2.6% in September. This rise suggests heightened price pressures in the Australian economy, potentially signifying growing inflationary challenges and increased costs of living. This uptick aligns with the global trend of rising inflation and may prompt the Reserve Bank of Australia (RBA) to take a more hawkish stance in its upcoming monetary policy decision to control inflation.

The AUDUSD exchange rate fell by 0.11% to 0.65907 on Monday amid these developments, with the pair currently in consolidation. The slight depreciation of the Australian dollar relative to the U.S. dollar reflects the market’s apprehension ahead of upcoming significant events, primarily the RBA’s monetary policy decision and the U.S. presidential election, both bearing high impact. Given Australia’s rising inflation, there is anticipation around whether the RBA will opt to increase interest rates to tackle inflation. Such a decision could support the Australian dollar. Conversely, the U.S. dollar is being monitored closely due to the U.S. presidential election’s potential influence on economic policy. Any political transition or continuity in the U.S. could sway investor sentiment and financial markets. Overall, these factors create a complex environment for predicting future movement in the AUDUSD pair, contributing to market consolidation as investors await clearer direction from these pivotal events.

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What can we expect from AUDUSD today?

AUDUSD on Monday dropped -0.11% to 0.65907. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for AUDUSD looks mixed as the pair is likely to consolidate above 0.65765 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.66190 or trades above daily pivot 0.65978. Break above could target R1 at 0.66119. While to the downside, we are looking at 0.65765 (S1) and daily low of 0.65836 as support levels. AUDUSD need to break on either side to indicate a short-term bias. A close below 0.65836 would indicate selling pressure.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

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