Australian Dollar Talking Points
AUD/USD[1] trades within the April range following the limited reaction to the Reserve Bank of Australia (RBA) interest rate decision[2], and the updated Statement on Monetary Policy may do little to sway the exchange rate as the central bank remains reluctant to switch gears.
AUD/USD Tracks 50-Day SMA Ahead of RBA Statement on Monetary Policy
AUD[3]/USD[4] continues to bounce along the 50-Day SMA (0.7707) following the failed attempt to test the March high (0.7849), and the RBA’s Statement on Monetary Policy may do little to influence the exchange rate as the central bank retains the current course for monetary policy.
It seems as though the RBA will utilize its emergency tools throughout the first half of 2021 as the “Board is prepared to undertake further bond purchases,” but the fresh forecasts coming out of the central bank may foreshadow a looming change in monetary policy as Governor Philip Lowe and Co. reveal that “the date for final drawings under the Term Funding Facility is 30 June 2021.”
In turn, projections for a stronger recovery may generate a bullish reaction in the Australian Dollar as the “bank's central scenario for GDP growth has been revised up further,” and the decline from the February high (0.8007) may turn out to be a correction in the broader trend rather than a change in AUD/USD behavior as the exchange rate remains on track to negate the head-and-shoulders formation from earlier this year following the failed attempt to close below the neckline.
At the same time, the recent flip in retail sentiment continues to dissipate to largely mimic the activity seen in 2020, with the IG Client Sentiment report[5] showing 45.00% of traders currently net-long AUD/USD as
