AUD/USD Sentiment and Positioning for the RBA Rate Decision
- RBA expected to keep policy rate unchanged, spotlight on forward guidance
- Aussie at trend-defining technical resistance level below 0.74 figure vs. USD
- Net-long speculative positioning setting argues in favor of a downside bias
The Reserve Bank of Australia is widely expected to keep its benchmark cash rate unchanged at today's monetary policy meeting. The priced-in probability of a cut is a mere 7 percent, according to what is implied in OIS rates. Still, the 12-month outlook calls for at least 25 basis points in further easing and envisions a 66 percent probability of 50 bps in cuts. With that in mind, traders will keenly monitor the statement accompanying the announcement to gauge when stimulus expansion will resume.
Technically speaking, AUD/USD finds itself at pivotal resistance below the 0.74 figure after surging on the back of deeply disappointing US payrolls data last week. Prices are perched squarely at a trend line guiding the down move since late April, a barrier reinforced by a horizontal pivot in play since October 2015. A break above this barrier would mark a near-term trend shift in favor of the upside. However, this is also a logical juncture for a corrective bounce to fizzle and give way to down trend resumption. The DailyFX SSI positioning indicator remains net-long, arguing in favor of a downside scenario.
--- Created by Ilya Spivak, Currency Strategist for DailyFX.com
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