The Australian dollar looks set to wake from its slumber

Photo: Michael Dodge/ Getty Images.

The Australian dollar had a quiet session overnight, briefly popping above the US 76 cent level before reversing lower amid low-volume, holiday-impacted trade.

The AUD/USD eventually finished Monday’s session buying .7578, an increase of just 0.11% on Friday’s closing level.

It currently buys .7585.

AUD/USD 5-Minute Chart

Hardly exciting, but that all looks set to change on Tuesday with the release of a raft of important Australian GDP inputs at 11.30am AEST, along with the Reserve Bank of Australia’s September monetary policy decision later in the session.

“AUD/USD will take some direction from the release of Australian quarterly net export and balance of payments data ahead of the RBA board decision,” said Richard Grace, chief currency strategist at the Commonwealth Bank.

“We don’t anticipate a large pick-up in volatility following the no-change decision by the RBA, and an accompanying statement indicating an economic view similar to the RBA’s quarterly Monetary Policy Statement released last month.”

While Grace doesn’t see a large increase in volatility accompanying the RBA rate decision that will arrive at 2.30pm AEST, there’ll still be plenty of interest in the accompanying monetary policy statement, particularly surrounding whether the board will insert an easing bias.

“Whether or not the post-meeting statement reveals any sort of ‘easing bias’ will probably be the main point of market interest”, notes Ray Attrill, global co-head of FX strategy at the National Australian Bank. “If it doesn’t, the AUD will probably trade firmer out of the announcement.”

For those looking for further information before the event arrives, this 10-second guide will help bring you up to speed.

With US markets resuming trade following the Labor Day holiday, there’s also a plethora of market moving data releases arriving later in the session, notes Attrill.

“There’s a lot on the economic and events calendar today and where the most market sensitive release should be the US non-manufacturing ISM,” he says.

“Following the unexpected fall to 49.4 from 52.6, the service sector version is also expected to have fallen but by a much smaller amount and from much better levels (55.0 from 55.5).

“Also due tonight is the Fed’s Labor Market Conditions Index (derived from 19 separate labour market indicators) and reported as just a monthly change (up meaning tighter, down meaning easier),” he adds.

Here’s the Aussie dollar scoreboard as at 8.30am AEST.

  • AUD/USD 0.7585 , 0.0007 , 0.09%
  • AUD/JPY 78.44 , 0.07 , 0.09%
  • AUD/CNH 5.0752 , 0.0048 , 0.09%
  • AUD/EUR 0.6803 , 0.0005 , 0.07%
  • AUD/GBP 0.5699 , 0.0005 , 0.09%
  • AUD/NZD 1.0379 , 0.0008 , 0.08%

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