AUD/USD continues to push higher toward 0.7050 ahead of RBA
- AUD/USD is erasing last week's losses on Monday.
- RBA is expected to announce a rate cut on Tuesday.
- US Dollar Index posts small daily gains near 94.00.
The AUD/USD pair dropped to its lowest level since mid-July at 0.6692 on Monday but staged a decisive rebound ahead of the American session. As of writing, the pair was trading at 0.7043, gaining 0.25% on a daily basis.
RBA to announce new policy easing measures
The improving market sentiment seems to be helping the risk-sensitive AUD find demand ahead of the Reserve Bank of Policy (RBA) announcements. However, with investors expecting the RBA to lower its policy rate and shift to a more dovish outlook, AUD could struggle to preserve its strength.
Previewing the RBA's November meeting, “we maintain our forecast that the RBA will deliver a slew of rate cuts. We expect it to cut the policy rate by 15bps to 0.10% and to lower the interest rate on its term funding facility and the target yield on 3Y government bonds to 0.10%," said Standard Chartered analysts. "We expect more back-end bond purchases to flatten the AUD yield curve and drive AUD underperformance.”
Reserve Bank of Australia Preview: Forecast from six major banks.
On the other hand, following last week's impressive rally, the US Dollar Index is staying relatively quiet near 94.00 as investors start to move to the sidelines ahead of the US presidential election.
Later in the session, the IHS Markit's and the ISM's October Manufacturing PMI reports will be looked upon for fresh impetus but the market reaction is likely to remain muted.
Technical levels to watch for