
Governor Lowe spoke yesterday in what was a must-watch event for traders of the AUD, however, we didn’t get too many indications of what might be ahead.
The key points raised by the RBA Governor were that there was very little chance of QE.
There had been some talk around possible QE if interest rates kept on falling, but Lowe was quick to hose that down.
He suggested that he would wait and see if rate dropped to 0.25% before making any assessment, however, it was clear he was reluctant to do that.
As such, it appears the odds of QE appear slim now at best, which in turn, is a positive for the AUD/USD. That said, if rates do fall all the way to 0.25%, then there might very well be some bigger worries for the economy by that point in time.
Lowe also did a good job of handballing the problems in the economy back onto the Government, by suggesting they needed to pick up their fiscal stimulus measure. He was obviously trying to make it less about monetary policy and more about the overall economy.
Nevertheless, the AUD/USD has not seen much of a bounce and remains under the 0.6800 level. For me, this is the key at the moment.
If we keep seeing price staying under that resistance level and knocking on the doors of the lows in a triangle type formation, that would suggest there is still strong selling pressure, which could see the Aussie fall away further.
We had a really decent test this week already and it couldn’t drop so that is suggesting there is still not a majority of participants that are ready to dump the Aussie just yet.
That said, I remain bearish under 0.6800.
