AUD/USD Outlook (06 July 2021)

#OPINIONLEADER#

ByJin Dao Tai

 JUL 6, 2021

Overall, AUD/USD is trending downwards. Recently, AUD/USD broke the resistance zone of 0.75000.

The Australian Retail Sales m/m data (Actual: 0.4%, Forecast: 0.1%, Previous: 0.1%) released yesterday indicated a higher than forecasted increase in consumer spending in May.

Also, the Australian Building Approvals m/m (Actual: -7.1%, Forecast: -5.0%, Previous: -5.7% revised from -8.6%) released indicated a stronger than expected decline in the number of issued building permits May.

The Reserve Bank of Australia (RBA) will be announcing their monetary policy decision later at 1230 (GMT+8). The central bank is expected to hold interest rate unchanged at 0.10%. Also, the RBA is expected to provide an update on their quantitative easing (QE) programme as it will be ending in September. With the recent economic recovery in Australia, it is likely that the central bank will be adopting a smaller QE programme while having the flexibility to review it as and when necessary. The RBA may also warn about the recent COVID Delta variant that has led to the lockdown of several parts of Australia, highlighting the need to adjust QE based on how the situation evolves.

Also, the RBA will be holding a press conference later at 1400 (GMT+8). During this time, volatility is expected in AUD.

AUD/USD’s next support zone is at 0.75000 and the next resistance zone is at 0.76500.

Look for short-term buying opportunities of AUD/USD if the RBA delivers a hawkish tone in its new QE plans.