Aussie steady after RBA Policy Statement, US NFP next

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<li>RBA policy statement says inflation high but declining</li>
<li>Money markets betting on a pause in September</li>
<li>US nonfarm payrolls expected at 200,000</li>
</ul>
<p>The Australian dollar has stabilized but it has been a rough week, with losses of 1.37%. In Friday’s European session, AUD/USD is trading at 0.6558, down 0.04%.</p>
<p><strong>RBA says inflation high but moving in right direction</strong></p>
<p>The Reserve Bank of Australia released its quarterly policy statement earlier today. Investors looking for clues as to the RBA’s next steps may be disappointed as there were no interesting disclosures. Still, the statement provides a useful summary of the RBA’s thoughts on inflation, which remains its primary focus.</p>
<p>The statement noted that inflation remains “high and broadly based” and voiced concern over high wage growth and strong services and core inflation. The statement added that inflation is moving in the right direction and is consistent with the RBA’s forecast that the 2% target will be achieved in 2025.</p>
<p>RBA Governor Lowe said at this week’s meeting that future rate decisions will “depend on the data” and the statement reinforced this stance. The RBA’s message to the markets is that a rate hike remains on the table, but the money markets are more dovish and have priced in another pause at 95%, according to the ASX RBA Rate Tracker. If the RBA decides to pause for a third straight time at the September meeting, I would expect to see increased speculation about rate cuts.</p>
<p>The US releases nonfarm payrolls, one of the most important US releases, later today. In June, a massive ADP employment report fuelled expectations that nonfarm payrolls would also soar. In the end, nonfarm payrolls fell to 209,000, down sharply from a downwardly revised 306,000. ADP sparkled again this week with a reading of 324,000. We’ll have to wait and see if nonfarm payrolls come in around the consensus estimate of 200,000 or follow ADP and move sharply higher.</p>
<p>.</p>
<p><strong>AUD/USD Technical</strong></p>
<ul>
<li>AUD/USD tested resistance at 0.6573 earlier in the day. Above, there is resistance at 0.6697</li>
<li>There is support at 0.6449 and 0.6375</li>
</ul>
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