AUD/USD Rate Outlook – 2020 High on Radar After RBA Meeting

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The AUD/USD tagged the new weekly high at 0.7343 as the RBA (Reserve Bank of Australia) meeting offered some hints for the extra monetary support and the Fed interest rate decision might keep these market trends in the right place with the central bank planning to get inflation which averages 2% over time.

AUD/USD Rate Outlook – 2020 High on Radar After RBA Meeting

The AUD/USD might continue to rebound the plunge from 0.7414 (2020 high) with the RBA minutes suggesting that the central bank will largely depend on its current resources to fully support the recovery of the economy, as indicated by Philip Lowe the governor and his associates might stick to the sides after it tweaked the Term Funding Facility this month.

It’s highly likely that the Reserve Bank of Australia isn’t in any haste to implement more monetary measures although Governor Lowe is considering how the additional monetary measures might support the recovery of the economy with the central bank relying heavily on the yield target program that the board insists should be carried out in order to properly maintain the current target.

On the other hand, it’s yet to be seen whether the update of the Australian employment data might influence the outlook of the monetary policy with the economy being expected to drop 50,000 last month, but the current macroeconomic environment might keep the AUD/USD afloat before the scheduled RBA interest rate decision meeting on 6th October with the federal reserve planning to achieve better inflation which averages 2% over time.

That said, the updates of the SEP might sway the short term forecast for the pair incase the interest rates show the downside revision in the long term outlook, but the same from the previous meeting might ignite a reaction with Jerome Powell, the chairman planning to increase their holdings of the commercial and agency residential backed securities and treasury securities.

A closer look ahead, the market trends might stay the same with the RBA ruling out the NIRP (Negative Interest Rate Policy) for Australia, and the crowding trends in the AUD/USD might carry into the end of this month with the retail traders remaining net short AUD/USD since April as Prices of Gold Weaken Ahead of FOMC Meeting Amidst Change in the US Dollar Sentiments.

As of today, the IGCS (IG Client Sentiment) report showed about 44.86% of investors are net-long with the current ratio of investors long to short at 1 to 1.23. The number of investors net-long is 1.56% higher as compared to yesterday.

The most recent surge in the current net long position has greatly helped reduce the plunge in the retail sentiments with only 41.74% of the investors being net long the pair earlier this week.

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