AUDUSD Holding Ahead of RBA Rate Decision

by on November 5, 2013 3:16 am GMT

The Australian dollar has held recent gains ahead of the rate decision by the Reserve Bank of Australia (RBA). It is speculated that the RBA will not cut rates lower while maintaining that growth is sub-par and there is a potential for future rate cuts to spur growth as needed.

Australian public debt yields were trading at a two-week high prior to tomorrow’s Australian trade balance. The trade deficit is expected to narrow.

“The RBA will definitely keep rates on hold,” said Richard Breen, senior consultant at Rochford Capital. He continued to say that “they will more likely try to talk down the Aussie. You may see a touch of weakness on the back of the statement today, but I think any weakness from any sort of dips will be bought into quite aggressively.”

Breen could be right as the Australian dollar has held fairly well under pressure as the central bank tries to lower the currency with rhetoric. RBA Governor Glenn Stevens will affirm that the Australian Dollar is still historical high and would need to be lower through monetary policy to foster further growth.

The Australian dollar has increased five percent within the last three months against a basket of nine other developed-nation currencies. The New Zealand came in second of the nine with a gain of 4.2 percent.

1D Chart of AUDUSD

1D Chart of AUDUSD

The AUDUSD has bounced lower from the 50 percent Fibonacci retracement level while being held under the 38.2 percent Fib. from the 1.0597 top. The 50 EMA is providing dynamic support with additional support at .9388. Upside can be seen at .9575 and .9623, or the 200 EMA.