- Summary:
- The AUD/USD price moved sideways after the Reserve Bank of Australia (RBA) published its latest minutes. What next for the Aussie?
The AUD/USD price moved sideways after the Reserve Bank of Australia (RBA) published its latest minutes. The pair was trading at 0.6820, which was about 2.18% above the lowest level last week. The AUD to USD exchange rate is currently about 11% below the highest point this year.
RBA committed to fighting inflation
The RBA published minutes of the last meeting in which the bank raised rates by 0.50%. That was its third straight rate hike this year as it continued its war against inflation. The minutes showed that the committee spent a lot of time deliberating the current state of the economy and inflation.
They noted that consumer prices remained at elevated levels because of the crisis in Ukraine. But they also noted that some important commodity prices had started to retreat, which is a positive sign. Indeed, prices of key items like copper, iron ore, wheat, and lumber have declined sharply in the past few months. As such, the RBA concluded that:
The size and timing of future interest rate increases will continue to be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market, including the risks to the outlook.”
The next key catalyst for the AUD/USD price will be the upcoming US building permits, and housing starts data. Economists expect these numbers to reveal that the country’s building permits declined sharply in June as mortgage rates soared. The data will come a day after another number showed that sentiment among homebuilders crashed to an all-time low.
The AUD to USD exchange rate is also reacting to falling expectations that the Federal Reserve will implement a 100 basis point rate hike. Analysts now expect that the bank will hike by 0.75% in its July meeting.
AUD/USD forecast
The four-hour chart shows that the AUD/USD exchange rate made a bullish breakout on Monday. It managed to move above the upper side of the descending channel shown in red. The pair also rose slightly above the 25-day moving average while the Relative Strength Index (RSI) moved above the neutral point at 50.
Therefore, the pair will likely continue pushing higher as bulls target the key resistance point at 0.6900. A drop below the support at 0.6770 will invalidate the bullish view. Find a live estimate of the AUDUSD price in our highly-accurate S&R indicator.
