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RBA minutes show intense focus on inflation and inflation expectations risksRBA minutes show intense focus on inflation and inflation expectations risks

Monday Overview of the AUD/USD

The AUD/USD gained 0.65% on Monday. Following a 0.71% rally on Friday, the Aussie dollar ended the day at $0.65562. The Aussie dollar rose from an opening price of $0.64992 to a session high of $0.65651.

RBA Meeting Minutes and Board Member Speeches in Focus

On Tuesday, the RBA meeting minutes will garner investor interest. Recent Australian wage growth and employment numbers signaled the need for a more aggressive RBA rate path. Tight labor market conditions support wage growth and disposable income. An upward trend in disposable income fuels consumer spending and demand-driven inflationary pressures.

The meeting minutes could reveal willingness among board members to push rates higher.

A more hawkish RBA rate path would raise borrowing costs, reducing disposable income and consumer spending. Significantly, a downward trend in consumer spending would ease demand-driven inflationary pressures.

RBA Governor Michele Bullock and board member Schwartz are on the calendar to speak. Hawkish comments would support buyer demand for the Aussie dollar.

Fed Speakers and Minutes in the Spotlight

On Tuesday, US existing home sales figures and the Chicago Fed National Activity Index (CFNAI) will draw investor interest. However, the FOMC meeting minutes will be the focal point.

Barring dire home sales figures, the CFNAI will likely be more influential on buyer demand for the US dollar. The Index gives investors a gauge of economic activity and inflationary pressures. However, investors will likely delay decisive moves until the FOMC meeting minutes.

Recent economic indicators have fueled bets on a May Fed rate cut. The inflation and retail sales reports were out after the FOMC meeting minutes, making the minutes dated. Nonetheless, the minutes could reveal where the Fed is primarily focused. In addition to inflation, labor market conditions and wage growth are other considerations.

Short-Term Forecast

Near-term trends for the AUD/USD hinge on the RBA and FOMC meeting minutes and speeches. Recent economic indicators tilted monetary policy divergence toward the Aussie dollar. The respective minutes and central bank speeches could reinforce bets on a policy divergence.

AUD/USD Price Action

Daily Chart

The AUD/USD held above the 50-day EMA while remaining below the 200-day, reaffirming bullish near-term but bearish longer-term price signals.

An AUD/USD break above the 200-day EMA would support a move to the trend line and $0.66162 resistance level.

The RBA and Fed meeting minutes and central bank speeches will be focal points.

However, a drop below the $0.65 handle would bring the $0.64900 support level into play.

A 14-period Daily RSI reading of 63.43 suggests a move to the trend line before entering overbought territory (typically above 70 on the RSI scale).

AUDUSD 211123 Daily Chart

4-Hourly Chart

The AUD/USD remains above the 50-day and 200-day EMAs, reaffirming bullish near-term price signals.

An AUD/USD break above the trend line would support a move to the $0.66162 resistance level.

However, a drop below the $0.65 handle would give the bears a run at the $0.64900 support level and the 50-day EMA.

The 14-period 4-Hourly RSI at 69.13 indicates an AUD/USD move to the trend line before entering overbought territory.

AUDUSD 211123 4-Hourly Chart

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