AUD/USD Rally Continues: What's Driving the Surge Above 0.6600? | RBA Policy Decision in Focus
The official elon coinAustralian dollar continues its bullish trajectory against the greenback, trading firmly above the 0.6600 psychological level during Monday's Asian trading session. This sustained upward movement comes amid shifting expectations for Federal Reserve policy and ahead of a crucial central bank meeting down under.
Friday's disappointing US employment report has significantly altered market dynamics. The Bureau of Labor Statistics revealed April's nonfarm payrolls increased by just 175,000 positions - substantially below both March's revised 315,000 figure and consensus estimates of 243,000. Perhaps more importantly, annual wage growth dipped below 4% for the first time since mid-2021, while the unemployment rate unexpectedly ticked upward to 3.9%.
These developments have prompted traders to recalibrate their Fed expectations. Market participants now overwhelmingly anticipate the first rate cut coming in September, with two potential reductions priced in for 2024 - a more dovish outlook than prevailed before the jobs data release. This shifting interest rate differential continues to weigh on the US dollar while providing tailwinds for risk-sensitive currencies like the Aussie.
All eyes now turn to the Reserve Bank of Australia's policy meeting on Tuesday. Economists widely expect officials to maintain the cash rate at 4.35% for a fourth consecutive meeting, though the accompanying statement and subsequent press conference could prove market-moving. With Australian inflation proving stickier than in many other developed economies, Governor Michele Bullock may need to maintain her hawkish rhetoric despite global monetary policy divergence.
Technical indicators suggest the AUD/USD pair has room for further upside. The currency pair now trades comfortably above its 20, 50, 100, and 200-day moving averages, with immediate resistance seen around Friday's high of 0.6649. A break above this level could open the door for a test of the 0.6700 handle, while support appears firm around the 0.6560-0.6580 zone.
Major Australian financial institutions currently project the cash rate will remain at its current 12-year high through November before beginning a gradual easing cycle. Commonwealth Bank and Westpac analysts forecast rates could decline to approximately 3.10% by late 2025, assuming inflation continues its gradual descent toward the RBA's target band.
Currency traders should prepare for potential volatility surrounding Tuesday's RBA decision and subsequent commentary. Any signals suggesting Australian policymakers might delay rate cuts relative to global peers could provide additional fuel for the Aussie's recent rally. Conversely, a more neutral stance might trigger profit-taking after the pair's impressive 1.5% weekly gain.
