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RBA Minutes and Gov Lowe Speech in focus for Aussie dollar

The Australian dollar started the week lower against its major trading partners after leaders of the Asia-Pacific Economic Cooperation (APEC) group were unsuccessful to agree on a communique for first time in APEC history.  China’s President Xi and US Vice President Pence traded barbs that accentuated the differences amongst the two countries on global trade.

Tuesday will see the release of the Reserve Bank of Australia (RBA) Minutes and later in the European session RBA Governor Lowe will deliver a speech titled “Trust and Prosperity” at the Committee for Economic Development of Australia Annual Dinner in Melbourne.  The minutes may not reveal much as the RBA has been consistent in reiterating that interest rates are low to support the domestic economy.  At November 5th rate decision, the RBA kept the Cash Target Rate unchanged at 1.50% for the 27th consecutive meeting.  They also raised their growth forecast in 2018 and 2019 from about 3.0% to about 3.5%, before slowing in 2020.

On November 8th, the RBA also released their quarterly statement on monetary policy and highlighted that official interest rates look set to remain on hold until the employment situation improves and inflation climbs higher. They also reiterated that higher interest rates likely at some point.  With inflation back below the RBA’s target range, most analysts are not targeting a hike until late 2019 or early 2020.

The Australian dollar may focus more on Governor Lowe speech since we have not heard from him since Sept 4th, where he reiterated the next move in rates will likely be higher, not lower.

Price action on the AUD/USD daily chart shows that recent bounce from the October low has made a higher high and recaptured both the 50- and 100-day Simple Moving Average (SMA).  If we continue to see this bullish bounce, price may find initial resistance from the 0.7400 region.  It is around that area that price could form a bearish Butterfly pattern.  If the pattern is invalidated, further upside could target the 200-day SMA, which currently trades around the 0.7444 level.


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Ed Moya

Ed Moya [5]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya