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Sr. Technical Strategist
The Reserve Bank of Australia raised rates by 25 basis points and the Australian dollar still fell, after the central bank removed its explicit commitment to raise rates further if needed. With the RBA decision out of the way, AUD/USD event risk moves to U.S. data, led by nonfarm payrolls, the release with the largest potential impact on U.S. monetary policy. The Australian dollar is down about 1.5% from its most recent high and is testing uptrend support. That leaves the pair exposed to every release on a crowded economic calendar.
Michael Boutros, StoneX Media Senior Market Analyst at StoneX, covers currencies, commodities and equity indices across multiple time frames, with a focus on event-driven moves. That coverage gives insight into how central bank guidance and U.S. economic data are driving AUD/USD.
The Reserve Bank of Australia's decision to drop its pledge to raise rates further if needed has moved AUD/USD event risk away from Australian policy and toward U.S. data. The central bank still delivered a 25-basis point hike, and Governor Bullock argued against reading the change as a step toward a pause. "But the markets have taken it in kind. And you've seen that the Aussie's under pressure," Boutros says. With the RBA out of the way, the Australian dollar trades on a calendar Boutros describes as "still loaded", spanning ADP employment, ISM services and Australian trade balance data. As a result, AUD/USD now depends less on the next RBA decision and more on how incoming releases reshape the U.S. policy outlook.
U.S. nonfarm payrolls carry more weight for AUD/USD than the other scheduled releases because the jobs report has the greatest potential to change U.S. monetary policy expectations. ADP employment and ISM services data arrive earlier in the sequence, whereas payrolls close it out. Consequently, AUD/USD traders weigh the Australian dollar's technical position against a U.S. release that can reprice the dollar side of the pair. According to Boutros, payrolls stand apart because "that has the largest impact on potential shifts in monetary policy here from the U.S.".
AUD/USD event risk surfaces first in closing prices, specifically in two tests, the pair holding uptrend support on a daily close basis and avoiding a weekly close below the 52-week moving average. The 52-week moving average matters because the Australian dollar has not yet closed a week beneath it, and a break would challenge the pair's long-running consolidation range. On the data side, ADP employment, ISM services, Australian trade balance figures and U.S. nonfarm payrolls each show how the policy backdrop is developing for both sides of the pair. U.S. midterm election results add a further layer of event risk as they are reported.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Michael Boutros, StoneX Media Senior Market Analyst
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