AUD/USD Outlook: Hawkish RBA Minutes Boost Aussie

• RBA policymakers considered a rate hike at their last meeting.

• Markets are implying an 84% chance of an RBA rate cut in December.

• Markets are pricing in a 75.5% chance of a 25bps Fed rate cut in September.

The AUD/USD outlook shows bullish enthusiasm, with the Aussie climbing following minutes of the Reserve Bank of Australia’s policy meetings. Meanwhile, the US dollar weakened as investors bet on a September interest rate cut ahead of Powell’s Jackson Hole speech.

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Minutes from the RBA’s latest meeting, published on Tuesday, showed policymakers almost raised rates because of high underlying inflation. However, after debating the risks, they decided to keep rates unchanged. The RBA is trying to balance inflation and the labor market. Higher rates could hurt the jobs sector and hurt the economy. Meanwhile, the central bank will be forced to delay interest rate cuts if inflation remains high.

The minutes dashed hopes for a near-term rate cut. However, markets are implying an 84% chance of a rate cut in December and another in February next year.

Meanwhile, the outlook for the Fed is mixed. Inflation is easing as expected. At the same time, although the economy is slowing, there remain points of strength. Therefore, the Fed is poised to cut interest rates by a quarter point in September. Markets are pricing in a 75.5% chance of a 25bps rate cut.

However, that perspective could change when Powell speaks at the Jackson Hole symposium. If he signals a rate cut, expectations will rise. On the other hand, if he maintains caution, the low-rate bets could fall.

Key AUD/USD events today

It could be a quiet day for the pair as there will be no key reports from the US or Australia.

AUD/USD Technical Outlook: The bullish trend is approaching the 0.6800 level

Technically, the AUD/USD price has broken above the 0.6700 resistance level. The upside bias is strong as the price has risen well above the 30-SMA. At the same time, the RSI is in the overbought region, indicating massive bullish momentum.

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After such sudden moves, the price usually pulls back to retest the 30-SMA before the bulls regain their strength. If this happens, AUD/USD drops below 0.6700 before continuing higher. On the other hand, there could be a stop above 0.6700 as the SMA catches up. The next target for the bulls is at the 0.6800 level.

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