AUD/USD faces not only the event risk from Wednesday's U.S. Federal Reserve policy announcement, but also a key speech from Australia central bank Governor Phillip Lowe and Australian labour market data on Thursday.
While dealers will be on alert for any hints of when the Fed might start to taper its stimulus, focus will be squarely on Lowe for any clues about the RBA policy outlook, as well as the labour data for any steer ahead of the July 6 policy announcement.
The RBA is currently buying bonds maturing in April 2024 as part of its yield curve control, with a view that inflation won't have returned to its 2-3% target, and interest rates won't therefore start to rise before then, so any mention of change/extension of this time frame will be key.
AUD/USD at 0.7700 is well within the confines of its recent 0.7813-0.7646 range, but 1-week expiry option implied volatility gained 1.0 to 8.0 since last week, and is 3.0 above 1-week historic volatility - its fair value measure, to flag the perceived AUD/USD short-term volatility risk premium.
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