The next monetary policy update from the Reserve Bank of Australia comes up on Tuesday at 03:30 GMT. The RBA is expected to keep rates on hold in a continuance of its 3-year static rate timeline, but there could be some dovishness from the accompanying rate statement. A lot of the action is on the US Dollar now, which weakened today after stimulus hopes rose. On the Australian front, the cash rate remains at 0.25%, as does the yield on the government bonds.
The key question for today’s announcement is whether the RBA would increase the size of its asset purchase program or bring on new stimulus measures. Either of these would be dovish for the Aussie Dollar and coupled with the announcement that US President Donald Trump has left the Walter Reed Medical Centre, this could be an opportunity to sell the AUDUSD, targeting the 0.70595 support level. This move would get a lift from a rejection at current price resistance of 0.72043.
On the flip side, we have a market that is expecting an additional stimulus package to be passed by the US Congress. Added to this may be an RBA decision not to tamper with the existing asset purchase program, while also holding on to a deferred date for any form of rate increases. This view may be AUD-positive, allowing the AUDUSD a chance at targeting the 0.72977 resistance target. Additional targets to the upside include 0.73831 and 0.74640. These targets will require the pair to break the 0.72043 resistance.
