A1 Trading Company

January 31, 2022

AUD: How To Trade Before RBA News

Frank Cabibi

AUD pairs are drifting higher today in anticipation of Governor Lowe speaking about economic outlook and bank policy going forward. Aussie pairs are running as high as 1.20% at the time of writing this (AUDJPY).

AUD Forecast This Week

The buck looks like it will remain in bullish favor up until Thursday's RBA statement. Investors are expecting a clearer picture on the bank's monetary policy after Thursday as well as some hopeful statements regarding rising annual GDP growth rate.

AUD
https://tradingeconomics.com/australia/gdp-growth-annual

Australia saw the largest growth in GDP in Q2 of 2021 and slowed down in the third quarter, but GDP beat expectations in both quarters. We won't see Q4's numbers until March 2. And the low forecast leads me to believe that we could see another beat in expectations although the annual GDP growth rate has slowed considerably.

Another factor to consider is that a recovering economy could then lead to higher interest rates, according to an FXStreet article. If we take into account the possibility of higher rates in the latter half of this year, then we have to consider the possibility of investors pricing in a higher value in the buck. Lowe will probably cover that topic in depth during the meeting this Thursday.

Pairs that will probably do the best with this news would be AUD/JPY, EUR/AUD, and AUD/NZD.

AUD Pair Setups

AUD
AJ forms a double bottom support level and bounces up towards the 50 and 200 DMAs. A falling trend line on the 1D chart looks like the next major level of resistance. Additional support lies below around 78.788.
AUD
EUR/AUD could find resistance at the falling trend line on this timeframe and revert back to the moving averages or the lows of 2022. 1.57205 seems like another level of support for price to come down to should the pair fall under the 200 DMA.
AUD
AUDNZD is coming up towards June highs of 2021 after a huge momentum shift on the pair. A golden cross opportunity also marks bullish favor as sentiment around the buck is getting more bullish. Support lies below around 1.06497.

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