AUD to USD Forecast: Market Awaits RBA Decision Amid Mixed Aussie Economic Data

Aussie Economic Calendar

ANZ Indeed Job Ads will spotlight the AUD/USD on Tuesday, August 6.

Economists forecast ANZ-Indeed Job Ads to fall by 0.9% in June after a 2.2% slide in May.

Another marked decline in job ads could signal a waning labor market, raising concerns about an Aussie recession. Lower job ads could reduce employment, wage growth, and disposable income. Downward trends in disposable income could adversely affect consumer spending that contributes over 50% to the Australian economy.

RBA Interest Rate Decision

Later in the morning session, the RBA interest rate decision and press conference will be crucial for the Aussie dollar.

Economists expect the RBA to hold the cash rate steady at 4.35%.

An unexpected rate hike could drive Aussie dollar demand, supporting a move toward $0.67.

The RBA considered lifting interest rates in June when the Monthly CPI Indicator was 3.6% (April). Inflation remained elevated in Q2 2024 fueling expectations of an RBA rate hike. The Monthly CPI Indicator is currently 3.8% (June).

However, China’s weaker-than-expected Q2 2024 GDP numbers could give the RBA some breathing room. The Chinese economy expanded by 4.7% in Q2 2024, down from 5.3% in Q1 2024.

If the RBA holds interest rates steady, the press conference will influence buyer appetite for the AUD/USD.

Expert Views on the RBA Rate Path

AMP Chief Economist Shane Oliver commented on Aussie inflation trends, stating,

“The pause in the fall in Aust inflation is not that different to what has been seen in other countries eg Canada and US…both of which then saw the fall resume. Note also that Aust inflation lagged on the way up and so is just doing the same on the way down.”

However, Natixis Asia Pacific Chief Economist Alicia Garcia Herrero said,

“The RBA will be watching incoming inflation data like ever before. Major central banks seem to have defeated inflation, but RBA seems stuck. RBA should have done more earlier, as the Fed did, but Australia’s household debt was just too much of a constraint.”

US Economic Calendar: Consumer Sentiment

Later in the session on Tuesday, the RCM/TIPP Economic Optimism Index will draw investor interest.

Economists predict an increase from 44.2 in July to 45.0 in August. The Index gauges consumer sentiment toward the US economy, inflation, the labor market, and personal finances.

Upward trends could signal higher consumer spending and a more upbeat economic outlook. However, increased spending may reduce investor expectations of multiple 2024 Fed rate cuts. A less dovish Fed rate path could push the AUD/USD toward $0.60.

Expert Views on the Fed Rate Path

On Friday, Bloomberg Chief Markets Editor David Ingles said,

“Govt bonds as a group up 8 straight days, longest streak in 4 years. Growth outlook souring, rate cuts starting to come out of the kitchen. Swaps signal 3 Fed cuts now fully priced this year. Eerily enough, last time we had an 8-day streak was when pandemic lockdowns pummeled the global economy.”

Short-Term Forecast: Bearish

Near-term AUD/USD trends hinge on the RBA interest rate decision and press conference. A surprise rate hike could push the AUD/USD toward $0.67. However, RBA Governor Michele Bullock’s press conference will likely be crucial.

Investors should remain alert, as uncertainty about the RBA rate path could fuel AUD/USD volatility. Monitor the real-time data, news updates, and expert commentary to adjust your trading strategies.

Stay updated with our latest views and analysis to manage exposures to the forex markets.

AUD/USD Price Action

Daily Chart

The AUD/USD sat well below the 50-day and the 200-day EMAs, confirming the bearish price trends.

A break above the $0.65760 resistance level would support a move toward the 200-day and 50-day EMAs. A breakout from the 50-day EMA could give the bulls a run at the top trend line.

The RBA monetary policy decision and press conference require consideration on Tuesday.

Conversely, an AUD/USD drop below the $0.64582 support level would bring the bottom trend line into play.

With a 14-period Daily RSI reading of 29.96, the Aussie dollar remains in oversold territory. Buying pressure may intensify at the $0.64582 support level.