Australian Dollar, AUD / USD, Reserve Bank of Australia -Talking Points
- Wall Street Evolves, But Technology Lags, Asia Pacific Stocks May Follow suit
- RBA decision may cause some volatility in the Australian dollar in the session on Tuesday
- AUD / USD moves up after moving averages converge to offer support
Asia Pacific Forecast Tuesday
Markets in the Asia-Pacific region may see a more upbeat tone across major stock indices after a generally upbeat Wall Street performance earlier in the week. The Dow Jones Industrial Average (DJIA) added 0.70%. Traders dived into industry and healthcare but moved away from tech stocks, with the NDX 100 falling 0.44%.
US dollar declines after Manufacturing PMI release from the Institute for Supply Management (ISM) does not match consensus… The weakness of the dollar helps to strengthen the position of precious metals. Gold and silver prices showed significant growth, increasing by more than 1% and 3.5%, respectively. Aside from the weaker US dollar, falling Treasury yields are also likely to push prices higher, with 10-year bond yields falling just over 2% overnight.
Elsewhere, the risk-sensitive Aussie rallies against the US dollar, reflecting not only broader dollar weakness, but stronger market sentiment. AUD / USD will be in the spotlight today as the May Reserve Bank of Australia (RBA) interest rate decision crosses borders. According to the economic calendar DailyFX, the central bank of Australia intends to keep the base rate at 0.10%.
The RBA is unlikely to change the message it conveyed this year, namely keeping rates at the same level until there is persistent inflation, as well as a strengthening labor market. However, some expect a change in the target bond to control the bond yield curve from April 2024 to the bond from November 2024, although this change may be premature and will most likely be announced later this year.
In addition to the RBA’s decision, the markets will continue to see several potentially significant economic events that need to be monitored. One is New Zealand’s labor market data on Wednesday, where analysts expect the island nation to report the first quarter unemployment rate to remain at 4.9%. Later in the week RBA Quarterly Monetary Policy Report will cross the wires and the United States is to publish its highly anticipated nonfarm employment report for April.
Technical Analysis AUD / USD
The Australian dollar is moving up against the US dollar, breaking the previous resistance area, which was observed until mid-April. The move up came from the area where three key simple moving averages (SMA) converged, with 20-, 50- and 100-day SMAs underpinning the daily candle. The upward movement will be aimed at overcoming the psychologically important 0.78 leverage. Alternatively, holding above 0.7750 – the resistance level seen throughout April – could push price back towards any of the key moving averages.
Daily chart AUD / USD
The chart was created with TradingView
TRADING RESOURCES AUD / USD
— Posted by Thomas Westwater, Analyst at DailyFX.com
To contact Thomas, use the comment section below or @FxWestwatervon twitter