The ‘surprise’ rate cut
Skerdian Meta • 1 min read
The Royal Bank of Australia cut the interest rates last night with 25 basis points to 2.25%. The move was unofficially announced last week by one of the RBA members in an interview, so it didn´t come as a surprise at all.
Yet, the Australian Dollar tumbled more than 170 pips and their neighbors’ currency, the Kiwi NZD followed it down.
I just have two things that I can´t figure out:
1. Why did it fall nearly two cents on a move that everyone knew about?
2. Why didn´t I sell this pair yesterday evening before going to sleep?
I guess that slight possibility that things might go the opposite way and that the RBA wouldn´t cut the interest rates made me and the market think twice and chicken out. It Looks like the SNB move, a couple of weeks ago has damaged everyone´s trading
But that doesn´t mean that we can´t still trade it. We had a small sell signal this morning already. These sorts of moves bring very good opportunities to sell the retraces and that´s the way we´re going to trade this pair today and in the near future. The moving averages in the 30-minute chart are here to help us define the resistance levels as we move
Meanwhile, the EUR/USD has broken out of its range that we highlighted in yesterday´s post and we got caught up in that move.