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The RBA is up this week!

Will the central bank cut its rates as markets are expecting? More importantly, how could the Aussie react?

Check out the points you need to know before you start trading AUD this week!

RBA’s policy announcement (Nov 3, 3:30 am GMT)

  • The Reserve Bank of Australia (RBA) kept its monetary policy steady in October ahead of the government’s fiscal plans announcement
  • AUD dropped when the govt shared that it will likely run a record budget deficit. It also didn’t help that Trump had halted relief aid talks until after the election
  • Some market players see the RBA cutting its interest rates from 0.25% to 0.10% this week
  • Others speculate that the central bank will just announce its plans to buy longer-term bonds
  • The relative uncertainty could lead to volatility for the Aussie during the release
  • Any Aussie move could soon fade as the U.S. elections take center stage

Lower-tier (but closely watched) economic releases

  • AIG’s manufacturing index rocketed from 46.7 to 56.3 in October and marked its first expansion since July
  • AIG’s construction index (Nov 3, 9:30 pm GMT) could improve from 45.2 to 45.4 in October
  • Retail sales (Nov 4, 12:30 am GMT) seen printing a 6.0% jump (from -3.4%) in Q3 2020
  • Trade balance (Nov 5, 12:30 am GMT) figures could show a tighter trade surplus as imports outpace exports
  • AIG’s services index (Nov 5, 9:30 pm GMT) seen improving from 36.2 to 37.0 in October

China’s PMIs

  • Some traders look at China’s PMIs for clues on global activity trends
  • The Caixin manufacturing PMI (Nov 2, 1:45 am GMT) could dip from 53.0 to 52.8
  • Caixin’s services PMI (Nov 4, 1:45 am GMT) also seen weakening from 54.8 to 54.0

Overall risk appetite

  • Rising COVID-19 cases around the world and the impact of lockdowns will continue to weigh on global risk sentiment and comdoll demand
  • Aside from the RBA, central banks like the Bank of England (BOE) and the Fed are also scheduled to publish their policy decisions this week and could produce decent countercurrency trade opportunities
  • The closely watched U.S. elections will also impact Aussie demand. Contested results will likely cause risk aversion and AUD selling

Technical snapshot

  • The Aussie has lost at least 1.0% against ALL of its major counterparts in the last 30 days
  • The comdoll has weakened by around 2.0% against the safe havens and the pound
AUD Forex Pairs Performance from MarketMilk
AUD Forex Pairs Performance from MarketMilk
  • Stochastic is flagging AUD/NZD, AUD/JPY, and AUD/USD’s “oversold” conditions on the daily time frame
  • AUD/CAD and EUR/AUD remain in neutral territory
AUD Forex Pairs Stochastic from MarketMilk
AUD Forex Pairs Stochastic from MarketMilk
  • The Aussie was most volatile against the safe havens in the last seven days
AUD Forex Pairs Volatility from MarketMilk
AUD Forex Pairs Volatility from MarketMilk