- AUD / USD is erasing last week’s losses on Monday.
- The RBA is expected to announce a rate cut on Tuesday.
- The US Dollar Index posts small daily gains near 94.00.
The pair AUD/USD It fell to its lowest level since mid-July at 0.6692 on Monday, but made a decisive rebound before the US session. At time of writing, the pair is trading at 0.7043, gaining 0.25% on the day.
RBA will announce new policy flexibility measures
Improving market sentiment appears to be helping risk-sensitive AUD find demand ahead of the Reserve Bank of Australia (RBA) announcements. However, as investors expect the RBA to lower its policy rate and shift to a more dovish outlook, the AUD could have a hard time preserving its strength.
In a preview of the RBA’s November meeting, “We stand by our forecast that the RBA will offer a series of rate cuts. We expect it to lower the policy rate by 15 basis points to 0.10% and lower the interest rate on its term financing facility and the target yield on 3-year government bonds to 0.10%, “Standard analysts said. Chartered “We expect more back-end bond purchases to flatten the AUD yield curve and drive the AUD underperforming.”
On the other hand, after last week’s impressive rally, the US dollar index remains relatively quiet near 94.00 as investors begin to sideline ahead of the US presidential election.
Later in the session, IHS Markit’s October Manufacturing PMI and ISM reports will be considered for further momentum, but market reaction is likely to remain quiet.
Credits: Forex Street
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