RBA has said that the economy is sluggish and the AUD is still too high. Obviously these statements would incline one to think the downward trend in AUD/USD is still intact. On the back of a slow economy and high unemployment it lowered its benchmark interest rate last month to an all-time low of 2.25%, true that before the effect of cheaper money can take effect on the economy and strengthen the AUD it will probably take more time and more rate cuts. The hammer printed on Feb 3rd would have given rise to thoughts of a retracement which ended up in a sideways movement.
But today’s candle bar is trading well above the top line channel at 0.785, looking like it’s breaking the channel it’s been in for the past 18 days, maybe leading further to a corrective move.
The RBA voted to keep interest rates unchanged at the last meeting staying at 2.25pct but there is likely another cut to come further in the year.
AUD rallied this morning as the move by central bank was completely unexpected – markets had already priced in a 25 basis point cut to 2pct so we will have to see how this pans out over the next day or so.
I think we will see some downward pressure to come especially on AUDNZD. I am shorting this pair at the moment with some good returns coming through.