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FOREX: AUD Receives China Boost Ahead of RBA, Goldman Sachs Expecting Pivot

FOREX
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  • News from China this morning has provided a boost to risk sentiment across fx markets, with AUD (+0.88) leading the G10 charge. We noted the monetary policy stance tweak and fiscal language used today reduces the odds of a meaningful move lower in the country's GDP growth target for '25.
  • Despite AUDUSD’s advance, trend conditions remain bearish and resistance is at 0.6497, the 20-day EMA. This average has capped gains well in recent weeks.
  • Notably, Friday was the first daily close below the 0.6400 mark since November 2023, and leaves key support at 0.6350 exposed as we approach Tuesday’s RBA meeting, where analysts are expecting an unchanged rate decision at 4.35%.
  • A disappointing Q3 GDP result increases the likelihood of the RBA’s Q4 forecast being revised down in February and Goldman Sachs are preparing for an imminent RBA pivot.
  • GS do not think that macroeconomic conditions are that different compared to G10 peers, and following most recent data, GS think the Bank is likely to adopt a more dovish tone this week, ahead of a February rate cut. Goldman think expectations can shift towards earlier easing and a more dovish RBA and recommend going short AUD/NZD with a target of 1.08 and a stop of 1.105.
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  • News from China this morning has provided a boost to risk sentiment across fx markets, with AUD (+0.88) leading the G10 charge. We noted the monetary policy stance tweak and fiscal language used today reduces the odds of a meaningful move lower in the country's GDP growth target for '25.
  • Despite AUDUSD’s advance, trend conditions remain bearish and resistance is at 0.6497, the 20-day EMA. This average has capped gains well in recent weeks.
  • Notably, Friday was the first daily close below the 0.6400 mark since November 2023, and leaves key support at 0.6350 exposed as we approach Tuesday’s RBA meeting, where analysts are expecting an unchanged rate decision at 4.35%.
  • A disappointing Q3 GDP result increases the likelihood of the RBA’s Q4 forecast being revised down in February and Goldman Sachs are preparing for an imminent RBA pivot.
  • GS do not think that macroeconomic conditions are that different compared to G10 peers, and following most recent data, GS think the Bank is likely to adopt a more dovish tone this week, ahead of a February rate cut. Goldman think expectations can shift towards earlier easing and a more dovish RBA and recommend going short AUD/NZD with a target of 1.08 and a stop of 1.105.