The AUD/USD staggered towards 0.7000 after the Fed meeting, but it might need the RBA to deliver the knock-out punch when they meet next week.
By the end of Wednesday's whipsaw U.S. session, it was clear the Powell-led Fed isn't as close to considering a rate cut as the market presumed nS0N21R01C. The Fed chair was neutral to upbeat and firmly asserted the upcoming data will decide which way the Fed leans.
The RBA meeting Tuesday will be a 'live' one. The RBA board will likely be updated on inflation and growth projections as the Statement on Monetary Policy (SOMP) is due three days later.
If the RBA cuts the cash rate by 25bps to 1.25%, the market will assume there will be at least one more 25bps cut by end-2019.
The AUD/USD would likely make tracks towards the flash crash 0.6715 low if the RBA delivers a 25bps easing, as the market is only pricing in a 40% chance according to RBAWATCH.
If the RBA decides to hold off, they will likely soften the ground for a rate cut through a clear easing bias in the statement and back it up with a lower inflation forecast in the SOMP on Friday.
Either way, the AUD/USD is likely to remain under pressure. Related comment nL3N22C0PD.