The AUDUSD pair is awaiting an interest rate decision from the Reserve Bank of Australia (RBA) this week, which could provide the impetus for another rally.
AUDUSD: Weekly Chart
The Australian dollar against the US dollar (AUDUSD) attempted to reach the June lows of around 0.6460 last week, but was unsuccessful and fell to 0.6445.
A Reuters poll of economists predicts that the Reserve Bank of Australia will keep its key interest rate unchanged at 4.10% on Tuesday, due to slowing inflation. The same analysts expect to see another rate hike next quarter.
Unlike recent polls, which were divided, the latest poll showed a nearly unanimous expectation for no move.
Thirty-four out of thirty-six economists believe that the Reserve Bank of Australia (RBA) will keep its official cash rate at 4.10% on September 5, in line with interest rate pricing in the futures market. This is due to the recent decline in inflation and a slight rise in unemployment. Two respondents expect a 25-basis-point hike.
“In August, the RBA projected a credible path to return inflation to target with rates of 4.10%, and when we examine the data since then, we do not see anything that would have caused them to alter their assessment,” NAB Bank’s Taylor Nugen stated. Among the major local banks, ANZ, CBA, and Westpac predicted rates to remain unchanged until the end of 2023, while NAB predicted one more rate hike to 4.35% in November.
Australia’s latest GDP figures are scheduled for release ahead of Wednesday trading, with a 1.7% year-on-year rate expected for the second quarter.
US GDP grew 2.1% in Q2, below expectations of 2.4%. Q1 GDP was revised up to 2%.
The increase in GDP in Q2 was attributed to a rise in consumer spending and non-residential fixed investment, but was offset by decreases in exports, residential fixed investment, and private inventory investment, according to the agency. The slowing economy and Friday’s unemployment increase could add a bearish tone to the US dollar.
Validus Risk Management’s Ryan Brandham commented that the US GDP came in at 2.1%, below expectations of 2.4%. He described this as a soft number, and suggested that the surprisingly resilient US economy may be finally showing signs of slowing after a long rate hike cycle.
“This weak figure will support those calling for a Fed pause in September, with more data yet to come before the meeting. We can expect a weaker USD and lower US rates for today’s session,” he added.