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Jan 31 - 09:55 PM

AUD/USD - COMMENT-AUD/USD Resilience Faces A Series Of Challenges

By Krishna K  —  Jan 31 - 07:21 PM

The Australian dollar has remained relatively resilient to the latest bout of risk aversion sweeping financial markets nL1N2K31X5nL1N2K42M3, but it faces a sterner test from multiple events this week.

The Reserve Bank of Australia holds a policy meeting Tuesday, Governor Philip Lowe delivers a speech entitled "The Year Ahead" on Wednesday and appears before parliament Friday, when the bank's quarterly Statement on Monetary Policy is also due.

The RBA statement and Lowe's speech may sound slightly more upbeat given the recent string of positive data but their overall tone will remain emphatically dovish.
Lowe is likely to use the speech to stress the slack still evident in the labour market and highlight how far the bank is from its 2-3% inflation target nL4N2K14MM.

Twenty-one of 22 economists polled by Reuters expect the RBA to hold its cash rate at a historic low of 0.1%.
The central bank is also likely to
announce an extension of its quantitative easing programme nL1N2K30B7.

Rising risks of a deeper stock market sell-off nL1N2K509L, a sizable drop in iron ore prices last week nL1N2K30FW, a correction in the commodities and metals markets nL1N2K40OK, and a lockdown in Perth nL1N2K6014pose further threats to the Aussie.

A daily AUD/USD close below 0.7590 is likely to trigger a decline to 0.7547-65 followed by 0.7503, which is the 38.2% retracement of its November-January rally nL1N2K305T.

For more click on FXBUZ


AUD: Click here

China's iron ore imports by country: Click here

Source:
Refinitiv IFR Research/Market Commentary

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