Market Insights > Daily Market Analysis

20 May 2025,06:51

Daily Market Analysis

Aussie Holds Firm Ahead of RBA Decision, Supported by Strong Jobs Data and China Stimulus Hopes

20 May 2025, 06:51

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Key Takeaways:

*The Aussie stood firm ahead of the RBA interest rate decision on Hawkish expectation.

*China rate cutting help to bolster the Aussie dollar’s strength.

Fundamental Analysis

The Australian dollar remained resilient against its G7 peers in recent sessions, underpinned by robust domestic economic data. A stronger-than-expected employment report — featuring upbeat employment change figures and a lower-than-anticipated unemployment rate — bolstered investor confidence, reinforcing expectations that the Reserve Bank of Australia may adopt a more hawkish tone.

Markets are currently pricing in a 25-basis-point rate cut at today’s RBA meeting. However, any deviation from this expectation, particularly a surprise hold or hawkish policy language, could trigger a sharp appreciation in the Aussie.

In addition, sentiment around the Australian dollar has been buoyed by policy developments in China. As a key proxy for Chinese economic momentum, the AUD stands to benefit from the People’s Bank of China’s recent decision to lower borrowing costs — a move seen as part of broader efforts to stimulate growth in the world’s second-largest economy.

Technical Analysis – AUDUSD

AUDUSD, H4

The AUD/USD pair is consolidating within an asymmetric triangle pattern, having traded sideways between the 0.6500 and 0.6365 levels over the past two weeks. A decisive break above the triangle’s upper boundary would signal a potential bullish breakout, suggesting further upside for the pair.

Momentum indicators paint a cautiously optimistic picture. While the MACD remains near the zero line — reflecting a neutral tone — the RSI has been climbing steadily, pointing to growing bullish momentum. Should this trend persist, the Aussie may gain further ground against the greenback in the near term.

Resistance levels: 0.6505, 0.6575

Support levels: 0.6420, 0.6360

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