AUD Shows Resilience Ahead of RBA Policy Decision

The Australian Dollar (AUD) has shown resilience ahead of the Reserve Bank of Australia's (RBA) policy decision on Tuesday, which is expected to keep the Official Cash Rate (OCR) steady at 4.35% for the second consecutive meeting.

Strategists at Societe Generale note that AUD/USD defended its 200-Daily Moving Average in June and has since formed a series of higher highs and higher lows on the daily time chart, indicating a short-term uptrend.

The pair's strength can be attributed to the US Dollar (USD) facing headwinds following a weaker-than-expected July payrolls report, which sparked a dovish shift in market expectations and reintroduced two-sided policy risk into the market.

Cleveland Fed President Beth Hammack stated that the Federal Reserve will need to deliver more than one interest rate hike to successfully rein in broadening inflation, emphasizing that current interest rates are not yet 'meaningfully restrictive' enough to cool economic pressures.