RBA Minutes Reveal Motive Behind the November Hike

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Aussie Dollar (AUD/USD, AUD/JPY) Analysis

• RBA minutes: Anchor inflation expectations whereas the money charge is relatively low

• AUD/USD retreats off intraday excessive and 200-day SMA – look ahead to additional USD weak spot

• IG consumer positioning narrows however latest adjustments favor upside potential

RBA minutes: Anchor inflation expectations whereas the money charge is relatively low

The minutes from the November seventh RBA assembly revealed a really shut name to hike charges by one other 25 foundation factors with the aim of anchoring inflation expectations. Key to notice inside the committee’s most up-to-date forecasts was the idea of additional charge hikes which have been constructed into the information. The choice was made slightly bit simpler with the Australian Cash Rate comparatively low when put next with different main central banks.

While Australian rates of interest are restrictive, the housing market appeared to indicate resilience, suggesting that demand was nonetheless posing potential issues within the sector and will impression value will increase down the road. Earlier this morning the RBA Governor Michele Bullock took half in a panel dialogue the place she highlighted the altering inflation profile which began out as a supply-side problem however has extra just lately proven that demand is taking part in an more and more higher function.

Learn How to Trade AUS/USD with Our Complimentary Guide

Recommended by Richard Snow

How to Trade AUD/USD

The AUD/USD Chart reveals a somewhat attention-grabbing response to the launched minutes which initially noticed AUD/USD rising to check the 0.6580 stage (April 2020 excessive). This is a big stage not solely as a result of it has come into play a number of occasions because the Covid-19 pandemic but additionally as a result of it coincides with the 200-day easy transferring common. In the London session, value motion has already climbed down from the session excessive however stays above the prior zone of resistance (now help) of 0.6570. Potential bullish catalysts could floor if incoming inflation knowledge in Australia tendencies greater or inflation expectations construct.

AUD/USD Daily Chart

Source: TradingView, ready by Richard Snow

IG Client Sentiment Shows Diverging Positioning however Favours Upside Potential

AUD/USD: Retail dealer knowledge reveals 58.99% of merchants are net-long with the ratio of merchants lengthy to quick at 1.44 to 1. We usually take a contrarian view to crowd sentiment, and the actual fact merchants are net-long suggests AUD/USD costs could proceed to fall.

Learn learn how to learn and apply IG consumer sentiment to you buying and selling course of by claiming your free sentiment information on the topic beneath:

of purchasers are internet lengthy.

of purchasers are internet quick.

Change in Longs Shorts OI
Daily -2% 2% 0%
Weekly -37% 94% -11%

— Written by Richard Snow for DailyFX.com

Contact and comply with Richard on Twitter: @RichardSnowFX

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