Australian dollar shorts covering ahead of RBA

RBA

The OIS market prices a 75% chance of an RBA rate cut 0030 ET (0430 GMT). The split among economists is virtually 50/50.

Traders have been betting on rate cuts for the past two weeks, as shown by the 8 day decline in AUD/USD that only eased Friday in a broad US dollar rout.

But in the last few hours, AUD/USD has made a modest push to the upside, to 0.7665 from 0.7635. It's the first sign that aggressive Australian dollar shorts are beginning to square up ahead of the decision.

AUDUSD intraday

Technically, there isn't much standing in the way of a retest of Friday's high and that's something I expect to see in the run-up to the decision.