Markets got what they wanted, but it’s not quite certain if the RBA did!
In typical ‘buy-on-rumour-sell-on-news’ fashion, the Aussie rallied strongly after an initial knee-jerk move down, after the RBA cut rates by 0.25% to 2%. The Aussie was little changed until the RBA announcement and then slumped as much as 0.6%, only to later reverse direction and gain as much as 1%. At the close of US trading hours, the AUD/USD remained steady above the 0.79 level at 0.794. For all intended purposes, it was thought that the RBA had hoped for a lower AUD/USD to aid sluggish Australian trade. They have certainly been ‘moral-suading’ the markets for it all along. Whilst the markets had forecast a cut, the resulting rally in the AUD/USD has certainly caught most traders by surprise. Perhaps it’s thought that with this pre-emptive move, the RBA may now be left with less scope for future loosening, leading to the Aussie dollar rebound. Or perhaps the RBA’s move was simply in anticipation of a weaker US payroll number this Friday. Whatever the case may be, the chart pattern looks like we may see a continuation of the bounce in the Aussie dollar with 0.80 a first resistance. Short of this continuation fail, we may see it pull back to the 0.78 support. A new level seems to have been established between the 0.78 and 0.80. Notably too, this is the first time the 20MA has crossed above the 50 MA since August last year.
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