RBA Dominates Outlook

AUD/USD finished the session higher on Monday, the pair closing the session at 0.7361 with a gain of 0.23% and just shy of session highs. A reminder that some participants will return today after the elongated weekend which was observed on the back of Monday's holiday in NSW.

• From a technical perspective AUD/USD remains in a range. The trend outlook is unchanged and bearish. This follows the recent breach of a channel base drawn from the Feb 25 high. Despite the fact that price has moved back inside the channel area, the move lower marks an important technical break, signalling potential for 0.7235 next, a 1.236 projection of the Feb 25 - Apr 1 - May 10 price swing. On the upside, initial resistance is at 0.7429, Jul 19 high.
• Iron ore could provide a headwind for AUD, futures in Singapore continue to hover around the lowest levels since early June having fallen over 16% from July highs. China is pushing forward with a crackdown on emissions heavy sectors which is expected to weigh on iron ore demand.
• The latest RBA monetary policy decision dominates the local docket, with most looking for the central bank to renege on its tapering move, which wasn't scheduled to get underway until September (click for our full preview of the decision)
• Elsewhere, building approvals, housing finance data and the weekly ANZ-Roy Morgan consumer confidence reading will hit. The local COVID situation will also continue to generate headlines.