The Australian Dollar is showing little movement on Monday. In the North American session, AUD/USD is trading at 0.6655, down 0.07%.

RBA expected to pause

The Reserve Bank of Australia wraps up a two-day meeting on Tuesday and is widely expected to maintain the cash Rate at 4.35%. The RBA last raised rates in November 2023 and rates have likely peaked.

There isn’t much suspense ahead of tomorrow’s meeting Economic growth has been hampered by elevated interest rates and the unemployment rate has been moving higher. This essentially precludes a Rate Hike. As for a cut in rates, the RBA is not in any rush, as inflation is falling but the current clip of 4.1%, it is more than double the 2% target.

The RBA hasn’t signaled it is planning to cut rates and has maintained a rate hike bias, although barring a jump in inflation, it’s very unlikely that we’ll see another rate hike. The markets are looking at an initial rate cut sometime this year.

Investors will be looking for hints at the meeting about future rate policy and the rate statement and Governor Bullock’s press conference could provide some insights. Any signals of a removal of its tightening bias could send the Australian dollar lower.

China, Australia’s largest trading partner, started the week with mixed data. Industrial production sparked with a gain of 7% y/y in January-February combined, its highest level in two years. This followed a 6.8% gain in December and easily beat the market forecast of 5%. Retail sales eased to 5.5% y/y in January-February, down from 7.4% in December but above the market estimate of 5.2%.

AUD/USD Technical

• There is resistance at 0.6584 and 0.6615
• 0.6528 and 0.6497 are providing support