There is a likelihood that the pair will keep rising as bulls target the upper side of the channel at 0.7555.
Buy the AUD/USD and set a take-profit at 0.7555.
Add a stop-loss at 0.7480.
Timeline: 1-2 day.
Set a sell-stop at 0.7500 and set a take-profit at 0.7400.
Add a stop-loss at 0.7600.
The AUD/USD remained started the month calmly as investors reacted to the relatively weak Chinese manufacturing data. The pair was also calm as the Reserve Bank of Australia (RBA) started its monthly meeting. It is trading at 0.7515, which is about 0.53% below the highest point last week.
RBA Interest Rate Decision
The RBA started its November meeting today and is expected to publish its decision on Tuesday. Analysts expect that the central bank will embrace a relatively hawkish tone considering that the country’s economy is starting to rebound again. The hawkish statement will likely be in line with its asset purchases program and yield curve control program.
In its previous meeting, the bank left its interest rate unchanged and signalled that it will hike rates in 2024. However, most analysts believe that the bank will hike rates ahead of that date. Indeed, the consensus view is that the RBA will signal that it will move before 2024.
The bank changed its official outlook of the pace of tightening recently when data showed that inflation had risen to 2.1%. This was higher than its estimate of 1.75%. Therefore, the AUD/USD will react to the official guidance about tightening from the bank.
The decision comes at a time when data from Australia shows that the economy is rebounding at a relatively faster pace. For example, data published by Markit and Australia Industry Group (AIG) showed that the Manufacturing PMI bounced back to above 50 in October.
Meanwhile, the AUD/USD is also reacting to economic data from China. According to China National Bureau of Statistics, the country’s manufacturing PMI declined to 49.2 in October. This was the second straight month that the economy has contracted after it weakened to 49.6 in September. These numbers are important since Australia and China have a close relationship.
The four-hour chart shows that the AUD/USD pair is trading at 0.7515, which is above the important support at 0.7478. This is an important support since it was the highest level on September 3rd. The pair is slightly above the lower side of the ascending channel. The bullish trend is also being supported by the 25-day and 50-day moving averages. Therefore, there is a likelihood that the pair will keep rising as bulls target the upper side of the channel at 0.7555.