RBA Dominates Outlook

AUD/USD rose on Monday, jumping from lows of 0.7706 to hit highs of 0.7767 near the end of the US session, the pair last trades down 3 pips at 0.7759. The latest RBA decision provides the headline risk event during Asia-Pac hours, although little is expected in the way of meaningful new info. A holiday in Japan will leave cash markets closed until London hours, with an ongoing holiday in China sapping further liquidity from the space.

• The RBA is set to leave its broader monetary policy settings unchanged when it issues its latest monetary policy decision on Tuesday. It will once again allude to a better than expected round of local economic developments over recent months, deploying the customary guidance ahead of the formal release of its updated economic projections via the Statement on Monetary Policy (SoMP) on Friday. Do note that RBA Deputy Governor Debelle will have the opportunity to fill in any gaps in communication on Thursday, when he gives an address on "Monetary Policy during Covid."
• From a technical perspective AUD/USD traded lower Friday but remains within its range and above 0.7691, Apr 22 low. A bullish price structure dominates following the recent break of a trendline resistance drawn off the Feb 25 high and a climb back above the neckline of a head and shoulders reversal pattern. Resistance is at 0.7816/18 the 18 Apr 29 highs. A clear break would open 0.7849, the Mar 18 high. Key short-term support is unchanged at 0.7691, a breach would be bearish.