RBA meeting looms as AUD/USD hits four-month low
The AUD/USD continues its downward trend, closing at 0.6512 amid lower Australian inflation and risk aversion flows. With the RBA interest rate meeting on Tuesday, market sentiment remains cautious.
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/news-article-image-folder/Adobe_USD_AUD_07-11-2024.jpg/jcr:content/renditions/original-size.webp)
AUD/USD on the ropes ahead of RBA
Last week, the AUD/USD finished lower at 0.6512 (-0.53%), marking a third straight week of declines and its lowest weekly close in almost four months. The decline was fuelled by cooler Australian inflation figures for the June quarter, risk aversion flows, and an unwinding of long AUD/JPY trades after the Bank of Japan raised rates and struck a hawkish tone.
This week, while risk sentiment and the AUD/JPY unwind will remain influential, all eyes will be on Tuesday’s RBA interest rate meeting, previewed below.
RBA interest rate meeting
Date: Tuesday, 6 August at 2:30pm AEST
At its last meeting in June, the RBA kept its official cash rate on hold at 4.35% for a fifth consecutive meeting. However, in the accompanying statement and press conference, the RBA sounded hawkish.
RBA Governor Bullock noted that the Board debated between a hike and a hold and that "a lot needs to go our way." The reintroduction of a comment at the end of its post-meeting statement that the RBA "will do what is necessary" to return inflation to target reinforced its hawkish bias.
Last week, the RBA's preferred measure of inflation, the trimmed mean, rose by 0.8% in the June quarter (consensus was +1.0%), allowing the annual rate to fall to 3.9% from 4.0%, marking a sixth quarter of lower annual trimmed mean inflation.
The cooler core inflation reading increased confidence that inflation can end the year at or close to the RBA's forecast of 3.4%. While the RBA's messaging tomorrow is likely to remain hawkish and be accompanied by a modest lift in its inflation targets, we expect the RBA to stay on hold at 4.35% before a first rate cut in December.
RBA cash rate target
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/au/images/News-and-articles/rba5aug.png/jcr:content/renditions/original-size.webp)
AUD/USD technical analysis
The AUD/USD's break below support at 0.6700 in mid-July, coming from the April 0.6362 low, was the catalyst for the AUD/USD acceleration lower. While the AUD/USD is oversold, and there were some signs of downside capitulation at last Wednesday's 0.6479 low, the lack of bounce warns that downside risks remain.
As such, while the AUD/USD remains below the 200-day moving average at 0.6590, there is scope to test trendline support at around 0.6415, coming from the October 2023 0.6270 low, with a sustained break below here opening the way for a test of the April 0.6362 low.
AUD/USD daily chart
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/au/images/News-and-articles/audusd5aug.png/jcr:content/renditions/original-size.webp)
- Source: TradingView. The figures stated are as of 5 August 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/ContentImage/Forex global component NA banner.jpg/jcr:content/renditions/original-size.webp)
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices