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FX Week Ahead – Top 5 Events: September RBA Meeting & AUD/USD Rate Forecast

FX Week Ahead – Top 5 Events: September RBA Meeting & AUD/USD Rate Forecast

Rich Dvorak, Analyst

RESERVE BANK OF AUSTRALIA (RBA) RATE REVIEW & AUDUSD PRICE OUTLOOK:

The September RBA meeting is on deck for next week and is certainly a top event to keep on the trading radar. High-impact event risk surrounding the Reserve Bank of Australia’s latest interest rate decision due for release this coming Tuesday at 4:30 GMT stands to send spot AUDUSD price action swinging despite the central bank widely expected to stay on hold. Although, the RBA’s most recent monetary policy statement noted that “it is reasonable to expect that an extended period of low interest rates will be required” which could foreshadow further dovish action in the near future.

SEPTEMBER RBA MEETING INTEREST RATE CHANGE PROBABILITIES

September RBA Meeting Interest Rate Cut Probabilities

Aussie outlook remains bleak and risks to the global economy remain tilted to the downside in light of ongoing US-China trade war uncertainty. Nevertheless, there is a 12.2% probability that the Reserve Bank of Australia cuts its policy interest rate next week according to the latest overnight swaps pricing.

AUSTRALIAN DOLLAR IMPLIED VOLATILITY & TRADING RANGES

Australian Dollar Implied Volatility and Trading Ranges

That said, the Australian Dollar remains at risk considering that RBA Governor Lowe could hint at another interest rate cut is coming down the road. Aussie risk is also highlighted by the rise in Australian Dollar implied volatility with the 1-week measures for the major AUD-crosses resting comfortably above their 12-month averages.

AUDUSD PRICE CHART: DAILY TIME FRAME (APRIL 08, 2019 TO AUGUST 30, 2019)

AUDUSD Price Chart Technical Analysis

We recently highlighted how Australian Dollar price action remains sluggish trade war tensions simmering. One possible explanation could be due to the looming September RBA meeting as forex traders await fundamental clarity. Consequently, Australian Dollar outlook will be largely dictated by the market’s reaction to the September RBA meeting.

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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