AUD/USD is up for the key moves as not only the Reserve Bank of Australia’s (RBA) quarterly Monetary Policy Statement but China’s Trade Balance is also up for publishing, respectively around 01:30 GMT and 02:00 GMT on Friday. It should additionally be noted that RBA Assistant Governor (Economic) Luci Ellis is also up for speaking at 01:45 AM GMT and will be closely followed for fresh impulse as well.
With the coronavirus (COVID-19) led lockdowns and worsening conditions in Victoria, Aussie policymakers are less likely to keep their hawkish bias. Further, traders are also anticipating a downward revision to the economic forecast to challenge the AUD/USD pullback from an 18-month top.
On the other hand, forecasts concerning China’s Trade Balance suggest figures to recede from $46.42 to $42B in July. Further, the YoY Exports likely to slump from +0.5% to -0.2% whereas the Imports may drop to 1% from 2.7% previous readouts.
Westpac follows the market suit to anticipate hardships for Aussie bulls:
RBA will release full detail of its updated forecasts in the August Statement on Monetary Policy. In Tuesday’s statement, Governor Lowe revealed that the forecast of -6%yr contraction by end 2020 has not changed, though they trimmed 2021 growth slightly, to +5%. Their assessment of the risks ahead will also be of interest and any commentary on the A$ bounce. Assistant Governor Economic Luci Ellis will then speak via an ABE webinar. China’s July trade and foreign reserve data is due along with the Q2 current account detail. Exports and imports are expected to be roughly flat versus July 2019.
How could it affect AUD/USD?
With the worsening of virus woes in Victoria getting a major attention off-late, RBA policymakers’ dovish tone could give reasons to the AUD/USD sellers to seek entries from the multi-month high. On a different page, the latest weakness in China’s PMI has already been ignored and hence any major disappointment from Beijing’s trade numbers will become necessary for the bears’ entry if RBA catalysts flash positive signals.
Technically, a sustained break of 0.7200 gives a free hit to attack the year 2019 top surrounding 0.7300. Alternatively, an ascending trend line from May 22 joins 21-day EMA to limit downside around 0.7110-0.7100 during the quote’s declines past-0.7200.
Key notes
AUD/USD sits near 1.5 year top above 0.7200 ahead of a busy day
RBA Preview: COVID running a muck? An Exy Aussie? Nah, no worries mate!
About RBA Monetary Policy Statement
The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negative (or bearish).
About China's Trade Balance
The Trade Balance released by the General Administration of Customs of the People’s Republic of China is a balance between exports and imports of total goods and services. A positive value shows a trade surplus, while a negative value shows a trade deficit. It is an event that generates some volatility for the CNY. As the Chinese economy has an influence on the global economy, this economic indicator would have an impact on the Forex market. In general, a high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds on to intraday gains after upbeat US data
EUR/USD remains in positive ground on Friday, as profit-taking hit the US Dollar ahead of the weekend. Still, Powell's hawkish shift and upbeat United States data keeps the Greenback on the bullish path.
GBP/USD pressured near weekly lows
GBP/USD failed to retain UK data-inspired gains and trades near its weekly low of 1.2629 heading into the weekend. The US Dollar resumes its advance after correcting extreme overbought conditions against major rivals.
Gold stabilizes after bouncing off 100-day moving average
Gold trades little changed on Friday, holding steady in the $2,560s after making a slight recovery from the two-month lows reached on the previous day. A stronger US Dollar continues to put pressure on Gold since it is mainly priced and traded in the US currency.
Bitcoin to 100k or pullback to 78k?
Bitcoin and Ethereum showed a modest recovery on Friday following Thursday's downturn, yet momentum indicators suggest continuing the decline as signs of bull exhaustion emerge. Ripple is approaching a key resistance level, with a potential rejection likely leading to a decline ahead.
Week ahead: Preliminary November PMIs to catch the market’s attention
With the dust from the US elections slowly settling down, the week is about to reach its end and we have a look at what next week’s calendar has in store for the markets. On the monetary front, a number of policymakers from various central banks are scheduled to speak.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.