Australian Dollar Talking Points:
- Australian Dollar could be in for some near-term volatile price action against USD
- The Aussie may decline versus the greenback on a hawkish Fed after status quo RBA
- AUD/USD fell below a descending channel, will support be able to hold it for long?
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Near-term options-derived support for the Australian Dollar may not hold for long if the currency falls against its US counterpart throughout the week. Looking at the table below, one-day and one-week implied volatility for AUD/USD is amongst the most elevated of the FX majors. A couple of domestic and external event risks may explain why the markets expect heightened price action.
Implied Volatility and Market Range for the FX Majors
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Immediately facing the Aussie Dollar is May’s RBA monetary policy announcement. The markets are expecting rates to remain unchanged and it isn’t until next year that they start envisioning a potential hike. This paves the way for another status quo release if the central bank remains patient as usual, which allows the Australian Dollar to focus on risk trends and external factors.
What may inspire some short-term volatility in the Australian unit is a local trade balance report on Thursday and RBA’s statement on monetary policy on Friday. The former may positively contribute to GDP as the surplus is expected to rise to A$865 million. The latter will provide fresh inflation estimates that could potentially hint at