AUD to USD Forecast: Aussie’s Sensitivity to RBA Bulletin and US Indicators

Highlights

• Wednesday saw the AUD/USD drop 0.10%, despite a 0.26% gain just a day before.
• RBA Bulletin emerges as a focal point after the overnight Fed interest rate decisions.
• Powell’s shift to data-dependence puts the US labor market in the spotlight.

Wednesday Overview

On Wednesday, the AUD/USD slipped by 0.10%. Following a 0.26% gain from Tuesday, the Aussie dollar ended the day at $0.64472. The Aussie dollar rose to a high of $0.65112 before falling to a low of $0.64397.

RBA Bulletin in the Spotlight

Monetary policy remains a hot topic following the overnight Fed interest rate decision and forward guidance. The RBA will be back in the spotlight this morning, with the RBA Bulletin in focus.

On Tuesday, the RBA meeting minutes showed a Board that wanted to assess the impact of monetary policy tightening on the economy. The Bulletin will offer RBA insights on the current macroeconomic environment and the economic outlook.

We expect the AUD/USD to be more sensitive than usual to the Bulletin. Investors need firmer evidence of the RBA intending to end its monetary policy tightening cycle.

US Jobless Claims and the Manufacturing Sector in Focus

On Thursday, US jobless claims and the Philly Fed Manufacturing Index will influence investor sentiment.

Fed Chair Powell moved into data-dependent mode on Wednesday. Tight labor market conditions would support consumption and the economy. However, elevated consumption would fuel demand-driven inflation and force the Fed to take a more aggressive rate path.

Economists forecast initial jobless claims to increase from 220k to 225k.

However, the Philly Fed Manufacturing Index also needs consideration. Cracks in the US economy could test the theory of a soft landing. Economists forecast the Index to decline from 12.0 to -0.7 in September.

Other stats include existing home sales figures that should have less significance than the jobless claims and Philly Fed numbers.

Short-Term Forecast

In response to the FOMC economic projections and press conference, the AUD/USD will likely become more data-sensitive. Nonetheless, the FOMC projections paint a rosier US economic outlook and suggest a delay in Fed monetary policy easing. Monetary policy and economic divergences remain tilted toward the dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD sat below the $0.64900 resistance level. Notably, the AUD/USD remained below the 50-day and 200-day EMAs, reaffirming bearish price signals. On Wednesday, the 50-day EMA rejected a move to $0.6550.

A break above the $0.64900 resistance level would give the bulls another run at the 50-day EMA. The RBA Bulletin and US jobless claims should favor the AUD/USD for another run at $0.65.

Failure to break above the $0.64900 resistance level would give the bears a look at the $0.63854 support level. A break below the $0.63854 support level would bring the trend line into view.

The RSI reading of 47.28 supports an AUD/USD move to the $0.63854 support level before entering oversold territory.

4-Hourly Chart

The AUD/USD sits below the 50-day and 200-day EMAs, reaffirming bearish price signals.

An AUD/USD break above the 50-day EMA would support an AUD/USD move to the 200-day EMA. However, failure to break above the 50-day EMA would leave the $0.63854 support level in play.

The 14-period 4-Hourly RSI at 47.44 supports an Aussie dollar return to sub-$0.64 before entering oversold territory.