RBA minutes preview: what to expect in AUD/USD?

AUD/USD is placed on the bid at the moment, following-on from a positive overnight session in the US while the DXY struggled anything more than marginal gains until supply in the greenback ensued. 

Risk appetite was mixed overnight, US yields gave back previous gains and the tone was less US economy and outlook friendly, supporting an advance in the antipodeans. The Aussie went from 0.7581 overnight to reach 0.7628 highs on Wall Street that extended in early Asia up to 0.7636 recent highs. We had RBA's Governor Philip Lowe speaking in early Asia who said that the current level of the Australian Dollar and rates is suitable for the economy  - supporting the bid while we now await the RBA minutes. 

RBA's Lowe: Current level of AUD and rates is suitable for economy

RBA minutes, what to expect?

In what looks to be a busy week in Asia and the Aussie with the unemployment data coming out later down the track, for today, we have the RBA minutes for the October meeting due. Casting minds back, the October meeting's statement maintained a neutral stance and the minutes could be supportive of the Aussie should they be consistent of the reduced dovishness that has been sounded from the new Governor of the Central Bank of late. Lowe was outspoken on the inflationary environment vis-a-vis their monetary policy and targets on his new engagement. However, conditions of the labour market could be a matter that had been discussed at the meeting while underemployment has been on the increase amounting to little productivity from skilled labour - Aussie negative. 

Aussie inflation on the up supporting bullish Aussie and neutral RBA 

Analysts at UOB offered the inflationary picture and expectations as noting that a private measure of Australian inflation expectations rose in October for the first time in three months. "The Melbourne Institute's 12-month gauge of inflation expectations rose to 3.7% in October, from 3.3% the previous month. That was the highest level since July. Last week, the Melbourne Institute said consumer inflation rose 0.4% in September and was up 1.3% on an annualized basis. That was the highest monthly reading since July. After cutting rates twice this year to new record lows, the RBA has maintained it has “more room” to move if needed. We keep to our long-held view for the RBA to keep rates steady. That said, the 3Q inflation report on 26 October will be closely eyed."

AUD/USD levels to monitor

Valeria Bednarik, chief analyst at FXStreet noted, " In the 4 hours chart, the 20 SMA keeps gaining upward speed  while the RSI stands at fresh monthly highs, heading north around 60, and the Momentum consolidates well above its 100 level, all of which supports an advance, particularly on a break above 0.7650, October 14th high and the immediate resistance."

Analysts at Westpac offered AUD/USD in a 1-3 month outlook: "While further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, the AUD is losing energy (perhaps a reflection of its declining yield advantage). By year end, there's a case for a correction towards 0.74 if the Fed tightens in December as we expect. (13 Sep)"

Meanwhile, Spot is presently trading at 0.7627 at time of writing, and next resistance can be seen at 0.7629 (Daily Open), 0.7631 (Yesterday's High), 0.7643 (Daily High), 0.7659 (Daily Classic R1) and 0.7676 (Weekly Classic R1). Next support to the downside can be found at 0.7625 (Daily Low), 0.7617 (Hourly 20 EMA), 0.7617 (Weekly High), 0.7608 (Daily Classic PP) and 0.7599 (Daily 20 SMA).