AUD/USD remains below 0.6500 ahead of the RBA decision, China Trade Balance

• Australian Dollar remains silent below a major level ahead of the RBA interest rate decision.
• Australia’s central bank is expected to increase interest rates by 25 basis points.
• China’s Trade Balance is anticipated an increase to $81.95B from $77.71B prior.

AUD/USD hovers around 0.6490 during the Asian session ahead of the interest rate decision by the Reserve Bank of Australia (RBA) scheduled to be released later in the day at 03:30 GMT. The pair suffered losses in the previous session due to the upbeat US Treasury yields, which helped the US Dollar Index (DXY) to rebound from the two-month low, trading near 105.20. However, at the time of writing, the yield on 10-year US bond trades in the negative territory around 4.63%. 

Australia’s central bank is widely anticipated to increase rates by 25 basis points, possibly in response to the recent Consumer Price Index (CPI) data. The third quarter of 2023 saw a rise to 1.2%, surpassing the market consensus of 1.1%. Furthermore, Australia's seasonally adjusted Retail Sales (MoM) for September exceeded expectations, with a reading of 0.9% compared to the market consensus of 0.3%.

Market participants will likely focus on Governor Michele Bullock's adherence to the recent hawkish stance, suggesting potential interest rate hikes in the future. Additionally, the major Australian banks—ANZ, CBA, Westpac, and NAB—adjusted their prediction for an RBA rate hike in light of resurging inflation and the hawkish remarks from RBA policymakers.

On the other side, Minneapolis Federal Reserve Bank President Neel Kashkari expressed in a Monday interview with the Wall Street Journal that, when it comes to monetary policy, he leans towards the side of being too cautious, preferring to overtighten rather than risk not doing enough to align inflation with the central bank's 2% target.

Moreover, traders also await China's Trade Balance data for October on Tuesday, with expectations of a rise to $81.95B, up from the previous figure of $77.71B. A greater-than-expected increase in the Trade Surplus could positively influence the AUD/USD pair, given Australia's significant role as one of China's major trade partners.