RBA is holding steady, not lowering rates anytime soon

Bearish Reversing Pattern in AUD/USD, As RBA Gives Dovish Signals

Posted Wednesday, November 9, 2022 by
Skerdian Meta • 2 min read

RBA is holding steady, not lowering rates anytime soon

AUD/USD turned bearish in April and it fell below the moving averages on the daily chart, turned into resistance immediately and they have been doing a great job keeping buyers under control, killing their hopes after every decent retrace higher. The 50 SMA (yellow) took its turn in September and it seems like this moving average is doing so again, as the price starts to reverse down today after the bullish momentum which started last Friday.

AUD/USD Daily Chart – The 50 SMA Rejecting the Price Again

The stochastic indicator is overbought and reversing down

Although yesterday the 50 SMA rejected the price and the daily candlestick closed as a doji, which is a bearish reversing signal after the bullish move. Today the sentiment has turned negative and stock markets opened lower after three strong days, so risk currencies such as commodity dollars are reversing lower as well. We opened a long term sell forex signal earlier here below the 50 SMA, so we’re bearish on this pair for the near future.

Remarks by RBA deputy governor, Michelle Bullock

Further rate hikes will be required
We have already raised rates aggressively
Size and timing of rate hikes will depend on the data
Inflation is too high, increasingly broad based
Good reasons to think we are approaching peak of inflation this cycle

Well, you gotta walk the walk and not just talk the talk. The latest RBA decision here to just increase the cash rate by 25 bps isn’t too convincing and hints that the central bank may be approaching the latter stages of its tightening cycle.

She mentions that the central bank could have a “scorched earth” rate policy to get inflation under control, but that it would not be the best outcome. In terms of their next steps, she maintains that they have flexibility as they “would raise rates faster if we thought inflation was not coming down as expected”. Right.