AUD/USD News: Where Is the Aussie Left After the RBA Meeting?
AUD/USD turned bearish at the end of December and has lost 4 cents since then. We saw consolidation around 0.65-66 for two weeks as USD traders were uncertain whether to continue pushing, but last week the strong NFP jobs report from the US sent this pair diving more than 100 pips lower, breaking below the range, however AUD buyers had one last hope on today’s RBA meeting.
The market activity in AUD/USD has been driven primarily by the USD side of the pair, following the USD sentiment and US fundamentals. In Q3 of last year, when the USD turned dovish as markets began to realize that rate cuts were on the way, the price in AUD/USD leaped roughly 600 pips higher. However, it turned downward this year as markets discounted the likelihood of the Federal Reserve relaxing policy.
On the daily chart, we’ve witnessed a consolidation above the 200 SMA (purple) which was acting as support, as the decline stalled, but after the strong economic data from the US last week sellers resumed control and the decline picked up again. So, the only one that can save the Australian dollar is the Reserve Bank of Australia’s (RBA) meeting and interest rate decision, which was held early this morning.
Inflation in Australia has consistently eased as a result of the worsening cost-of-living crisis, with Trimmed Mean CPI which indicates core inflation, slowed to 4.2% in Q4, compared to 5.2% in Q3. This leaves no room for RBA to raise rates further, so markets are now contemplating when will the first rate cut come. However, the RBA did throw another hike comment, which the market took as hawkish, sending AUD/USD 30 pips higher, but nothing to change the game.
Reserve Bank of Australia Policy Meeting February 6
- Cash Rate:
- The RBA has decided to keep the cash rate unchanged at 4.35%.
- Inflation Assessment:
- Recent data indicate that inflation is easing, but it remains high.
- The Board expects that it will take some time before inflation is sustainably within the target range.
- Inflation Figures:
- Inflation continued to ease in the December quarter but remains high at 4.1%.
- Goods price inflation was lower than the RBA’s November forecasts.
- Services price inflation declined at a more gradual pace and remains high.
- Global and Domestic Considerations:
- Favourable signs on goods price inflation abroad have been noted, but services price inflation has remained persistent, and a similar trend could occur in Australia.
- Wages growth has picked up but is not expected to increase much further.
- Economic Outlook:
- The economic outlook is still highly uncertain, and the Board remains attentive to inflation risks.
- Encouraging signs are noted, but uncertainties persist.
- Services Price Inflation Expectations:
- Services price inflation is expected to decline gradually as demand moderates, and growth in labor and non-labor costs eases.
- Medium-Term Inflation Expectations:
- To date, medium-term inflation expectations have been consistent with the inflation target, and it’s emphasized that this should continue.
AUD/USD Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals