AUD/USD relief rally accelerates ahead of US retail sales data

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Nov 16, 2021
  • The AUD/USD pair rose slightly after the latest RBA minutes.
  • The RBA repeated that it believes that it will hike rates in 2024.
  • The pair will next react to the latest US retail sales data.

The AUD/USD pair held steady on Tuesday morning after the latest RBA minutes and ahead of US retail sales data. The pair is trading at 0.7360, which was about 1.10% above last week’s low. 

RBA minutes and US retail sales data

The Reserve Bank of Australia published minutes of the last monetary policy meeting on Tuesday. The minutes showed that the bank still believes that it will need to hike interest rates by 2024. This is a statement it has made several times before and one that most analysts don’t seem to believe. 

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Besides, the Australian economy is recovering well and that inflation has risen substantially in the past few months.  As a result, many analysts believe that the RBA will actually raise interest rates as soon as in 2022. The bank said:

“The central scenario for the economy continued to be consistent with the cash rate remaining at its current level until 2024. However, as the risks to the inflation forecast had shifted higher, it had become possible that an earlier increase in the cash rate would be appropriate.”

In its recent decision, the bank decided to end its yield curve target. In it, it was targeting the bond yields of 2024 bond yields. 

Looking ahead, the AUD/USD pair will react to the upcoming Australia jobs data that will come out on Wednesday. The data are forecast to show that wage growth rose by 2.2% in the third quarter and move to where they were before the pandemic. The RBA believes that wage growth needs to rise to about 3% for rate hikes to happen.

The AUD/USD pair will also move because of the latest American retail sales data scheduled for later on Tuesday. These numbers are expected to show that the country’s sales held steady in October even as US inflation surged.

AUD/USD forecast

AUD/USD

On the four-hour chart, we see that the AUD/USD pair declined to a low of 0.7278 last week. This was an important level since it was along the 61.8% Fibonacci retracement level. Since then, the pair has bounced back and is currently slightly above the 50% retracement level. The pair has moved to the 25-day and 50-day exponential moving averages (EMA) while the Relative Strength Index (RSI) has risen. Therefore, the pair will likely keep rising as bulls target the next key resistance at 0.7400.

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