Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
AUD/USD Price Outlook: Australian Dollar Awaits RBA Decision

AUD/USD Price Outlook: Australian Dollar Awaits RBA Decision

Rich Dvorak, Analyst

AUSTRALIAN DOLLAR OUTLOOK: AUD/USD EYES RBA DECISION ON DECK

  • Australian Dollar front and center headed into upcoming RBA rate decision
  • AUD/USD implied volatility was just clocked at 10.4% for the overnight tenor
  • The Reserve Bank of Australia might decide to forge ahead with tapering QE

The Australian Dollar advanced slightly during Monday’s trading session with AUD/USD closing 16-pips higher on balance. Aussie bulls drove the major currency pair up 0.5% at its intraday high, but gains were pared as market sentiment softened broadly. The US Dollar also seemed to catch an afternoon bid following some relatively hawkish comments from Fed Governor Christopher Waller.

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Rich Dvorak
Trading Forex News: The Strategy
Get My Guide

AUD/USD price action now shifts focus to high-impact event risk posed by the upcoming RBA decision. The Reserve Bank of Australia is scheduled to provide an update Tuesday, 03 August at 04:30 GMT. Though the central bank is widely expected to leave monetary policy unchanged, volatility could accelerate if tweaks are made to the current timeline for tapering asset purchases.

AUD/USD PRICE CHART: DAILY TIME FRAME (09 APRIL TO 02 AUGUST 2021)

AUDUSD Price Chart Australian Dollar Forecast RBA Preview

Chart by @RichDvorakFX created using TradingView

In fact, overnight implied volatility for AUD/USD just jumped to 10.4%. This compares to its 20-day average reading of 8.5% and ranks in the top 70th percentile of measurements taken over the last 12 months. That seems relatively low for an RBA rate decision, however, and could suggest markets see the central bank forging ahead with plans to taper QE next month. On the other hand, in light of recent lockdowns and downside risks stemming from the delta variant of covid, there is potential that RBA guidance is shifted to reflect a tapering delay.

AUD/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -11% 16% -5%
Weekly -13% 20% -6%
What does it mean for price action?
Get My Guide

The latter scenario would likely be bearish for the Australian Dollar and AUD/USD price action. This might see the Aussie weaken back down to July swing lows around the 0.7300-handle. Conversely, the Australian Dollar could push higher if the RBA stands pat on its QE taper timeline. That could see AUD/USD bulls eye the 20-day simple moving average as nearside resistance. Eclipsing this technical obstacle likely opens the door to the upper Bollinger Band near the 0.7500-price level.

-- Written by Rich Dvorak, 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.

DISCLOSURES