RBA Decision Set to Spark Action in AUD/USD
The Australian dollar (AUD) has been in a state of limbo recently, reflecting a neutral tone in its price action against the US dollar. The Reserve Bank of Australia's (RBA) upcoming decision on monetary policy is expected to be pivotal in determining the direction of AUD/USD.
Markets are largely pricing in another interest rate increase from 4.35% to 4.60%, with over a 90% chance of this outcome. However, what may matter more than the decision itself is the message accompanying it. Traders will likely focus on signals regarding the future path of monetary policy and inflation.
Australia's latest inflation figures showed a slowdown from 4.6%, but remained above the central bank's target of 2%. The upcoming release of August inflation figures may reinforce the view that inflation pressures persist, and restrictive monetary policy may be needed for longer.