RBA Cut Rates To A Fresh Record Low

Whilst the cut was largely expected, an easing bias remains which could entice further selling of the Aussie.

With futures markets implying an 80% chance of a cut, and around 70% of economists also on board, then it was always going to take more than a simple cut to sink AUD today with any vengeance. Yet looking through their October statement suggests that an easing bias remains, which leaves room for another cut this year. If markets agree, we could see some bearish follow through in due course.


After an initially lacklustre reaction, AUD/USD has now sliced through key support and on track for a bearish outside day. Not helping of course is the stronger USD which has seen DXY hit its highest level since May 2017. From here, bears could target the YTD lows and intraday bears could seek short setups whilst price action remains below prior support around 0.6740. A solid upside break of the bearish channel and / or the current four-hour candle high invalidates the bearish bias.


AUD/JPY remains reluctant to break out of compression, although the current four-hour candle is the most volatile in the entire range. So the fact that’s its bearish and provided a failed break higher could appeal to bears and show there is plenty of supply around 73.30.

Whilst we may have seen the swing high in place, a more cautious approach is to wait for a clear break of support around 72.50 before assuming its next leg lower in underway. Keep an eye on indices too, as we’d want to see these falling lower to confirm a break lower on AUD/JPY.


Related analysis:
AUD Under Pressure Ahead Of Tomorrow's RBA Meeting
It Could Be Make Or Break For The Aussie, With Several Pairs Sitting At Support
AU Unemployment Rises, RBA To Ease Again In October?
RBA Hold Rates, AUD Sticks To Its Lows Ahead Of GDP



Related Articles

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.