While the economic calendar is thin this week, we do have the RBA which is worth paying attention to.
That said, we shouldn’t be expecting any changes at all when we hear from Governor Lowe and his men and it will be another case of wait and see.
As it stands, we should expect the RBA to leave the cash rate on hold at a record low level of 0.25%, while there will be no further increases in the rate of asset purchases. With that in mind, some might consider this to be a bit of a non-event.
The RBA has made it clear that they are highly unlikely to provide further monetary policy stimulus, which would mean cutting the cash rate to zero or ramping up QE. In their mind, they have done enough and they keep on calling for the Federal Government to take the reigns and provide further fiscal stimulus.
Clearly, the fallout across the broader economy is not as bad as first feared, however, getting back to strong growth is still some time away. We have also heard recently that the second larger state in Australia is looking at imposing social distancing measures once again after a second outbreak of COVID-19, which is sure to weigh on the economy in the short-term. That comes on the back of more border closures.
This will have to be a factor in the RBA’s thinking, but as mentioned, we still shouldn’t expect any real changes to policy this time around.
The AUD/USD is continuing to push higher and we’ve seen price reclaim the 0.6900 level as well as break out of that descending triangle pattern.
We have massive resistance above at 0.7000, however, price must first retake 0.6966, which is going to see some selling pressure as it is the most recent high.
I still believe we will see further consolidation between 0.6800 and 0.7000 for the foreseeable future and the RBA is unlikely to spark any real moves.