AUDUSD vulnerable ahead of this weeks RBA communique

Last week's extended and deeper COVID lockdowns saw the Australian Government roughly double its support for the economy to over $1B a week.


This week, the RBA will have the opportunity to increase its support level and provide updated forecasts at its monthly Board meeting on Tuesday and in its Statement on Monetary Policy on Friday.

The expectation is for the RBA to downgrade near-term Q3 GDP significantly. However, with a relatively strong recovery predicted in Q4 as restrictions are eased, medium-term forecasts are expected to remain relatively unchanged.

In a case of unfortunate timing, the RBA is expected to reverse last month's decision to taper QE and will announce that it will continue purchases at A$5bn/week beyond September, signalling a willingness to be flexible in light of new developments.

Adding some intrigue around this decision, Westpac's influential Chief Economist Bill Evans is calling for the pace of the RBA's purchase program to be increased. Given this morning's extension of lockdowns in QLD, an increase in the rate of purchases to A$6bn/week cannot be ruled out.

Aside from QE, the RBA is expected to maintain its yield target at 0.1% on the April 2024 bond and reiterate that a hike in the cash rate is unlikely until 2024.

Heading into this week's dovish RBA communique, the AUDUSD is in a vulnerable position, trading not far above the recent .7289 low, an -11% fall in iron ore at the back end of last week, providing an additional headwind to the currency.

Technically while the AUDUSD remains below trend channel and horizontal resistance at .7420ish, downside risks remain towards .7200c and possibly towards medium-term support .7020/.6990.

Aware that a rally above .7420 would likely see the AUDUSD push towards the 200-day moving average currently at .7600c.


Source Tradingview. The figures stated areas of the 2nd of August 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

More from FX


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.