The Australian dollar traded higher against its U.S. counterpart after the release of the company operating profits and as the investors looked ahead in the upcoming meeting of the Reserve Bank of Australia.
During the morning session, AUD/USD opened at 0.75678 with an intraday high of 0.760.18 and an intraday low of 0.75674. The pair found resistance at 0.76136 and support at 0.75657 at it closed at 0.76001. Considering the movement of the price, it will likely move higher after it surpassed the upper barrier.
Last week, the pair remained steady, although the dollar rallied against other currencies. This week, a bullish trend is expected for the Aussie behind the speculation that the RBA will keep its interest rate unchanged. After a tight trading range, the currency may move toward a high volatility as the Fed officials turned data dependent for the next rate hike.
According to the data provided by the Australian Bureau of Statistics, the Australian gross operating profits increased by 6.9 percent, while the value of the stocks held by the Australian firms climbed by 0.3 percent in the second period of the year.
Economists consider the data as the start of the recovery of the economy. The service sector has shown improvement in the past few months. Adding to this, the export sector moved forward with the rally of iron ore and natural gas exports.
On, Wednesday, the market is looking forward for the quarterly growth data, which could add to the optimistic outlook of the economy.
RBA Policy Meeting
Meanwhile, the RBA is scheduled to announce its benchmark interest rate on Tuesday. The central bank is expected to keep its cash rate unchanged as the members might consider a more stable economy before implementing an adjustment.
The FSM News group of analysts expects the rate to be steady as the financial market remains volatile before the conclusion of the Fed meeting happening this month. Another factor to be considered is the fact that the bank has cut its rate for twice already, it may not want to make a huge action first. RBA governor Glenn Stevens is also set to retire this September, the bank then may need to settle the associated documents, thus, a rate hike might not be its main focused.
Notably, there has been improvement in the economic sectors in Australia. However, these might not be enough reasons to push a change in the rate hike. The bank will probably keep its negative rate until the end of the year. If this case persists, it would be hard for the Aussie to keep its bullish trend for a long time.
However, as the U.S. dollar loses its momentum, commodities find their way up. Oil futures, for instance, had its biggest weekly lost, but it bounced back earlier today despite the existing glut sentiments. This recovery of commodities could drive the Aussie higher, considering it is one of the commodity-dependent currencies.
For the rest of the week, the European Central Bank and the Bank of Canada are set to release their respective benchmark interest rates and policy statements. Further, the United Kingdom will release its manufacturing and industrial production data while China will disclose its consumer and producer price report.
As of 10:35 UTC, here’s the Australian scoreboard: