The Australian dollar is slightly lower as the currency markets are static at the start of the week. Currently, AUD/USD is trading at 0.7346, down 0.11% on the day.
Investors eye Business Confidence, RBA’s Lowe
The economic calendar is on the thin side this week, which could mean limited, choppy movement for the Australian dollar. Things will pick up during the week, starting with NAB Business Confidence on Tuesday. The index sank in July with a reading of -8, ending a streak of nine consecutive gains. This will be followed by RBA Governor Phillip Lowe speaking at an online event; the markets will be listening closely and looking for hints as to any plans to reduce the bank’s bond-buying progamme.
It was a rough week for the Australian dollar, which fell 1.36% last week. Much of the downswing can be attributed to the RBA, which announced at last week’s meeting that it would not review tapering its bond purchases until February. The Bank had planned to review the programme in November, but the weak recovery in light of a spike in cases of Delta variant of Covid-19 necessitated the extension. The Bank is currently buying AUD 4 billion in bonds each week, down from AUD 5 billion.
In the Bank’s rate statement, Lowe said that the damage from Covid would “delay, but not derail” the economic recovery. The reaction from the markets which sent the Aussie was understandable. At the same time, the RBA remains committed to further tapering when economic conditions improve. The question is one of timing – a taper is highly likely in February, but the Bank could make a move earlier than that if economic activity storms back.
AUD/USD Technical
- There is resistance at 0.7433, followed by 0.7512
- The first line of support is at 0.7310, followed by 0.7266