The Australian Dollar has been rising strongly over the last days. Yet, is the rate cut already priced in by the market? Axiory's research team has shared insights on the Aussie.
July 1, 2019 | AtoZ Markets - The Australian dollar has advanced nonstop over the last two weeks and the AUDUSD pair rose to six-week highs on Friday as the Aussie managed to crawl back above the psychological 0.70 handle.
However, Monday has brought with it some selling and it looks like the pair will be calm throughout the day, ahead of the RBA monetary policy decision.
The Reserve Bank of Australia is expected to cut the rate
During the Tuesday Asian session, the Reserve Bank of Australia is widely expected to cut the main refinancing rate (again) and this time the rate will decline to 1.00% from 1.25% previously. This will be another record low for the Australian rate.
Considering the Aussie has been rising strongly over the last days, it seems that this rate cut is not already priced in. Therefore, should the RBA sound dovish after the rate cut, the Australian dollar could plunge afterwards. Volatility should be higher after the decision. Wednesday's night will bring Australian will bring building permits and Thursday's night will bring retail sales.
Data could be positive for the greenback
From the US dollar perspective, the most important data are due on Friday, when the US labor market data will be released. This time, the market expects 158,000 new jobs for June, up from 75,000 in May, while wage growth is seen accelerating a bit to 3.2% year-on-year. Data could be positive for the greenback.
Technically speaking, there is a strong psychological and technical resistance near the 0.70 level. If the Aussie manages to close above this mark on a daily basis, the medium-term trend could change to bullish. Another target would then be in the 0.7050-0.7060 zone, or possibly near the 0.71 level.
Supports could be located near 0.6960, where previous lows are seen, or possibly near the 0.69 mark. The trend for this week will depend on the RBA decision and how dovish will it sound.