RBA passes without event providing comfort to AUDUSD shorts
Tony Sycamore October 5, 2021 10:17 AM
As widely expected, at its monthly board meeting this afternoon, the RBA kept monetary policy on hold, including its targets of 10 basis points for the cash rate and the yield on the April 2024 Australian Government bond.
The RBA's forward guidance remained dovish, again signalling that the conditions needed to raise interest rates (inflation sustainably between the 2% to 3% target rate and wages growth of 3%) are unlikely to be met until 2024 the earliest.
After tapering its Quantitative Easing program at its last meeting, it committed to keeping the rate of bond purchases steady at $4bn a week until February.
The RBA remains confident that once the current lockdowns end, the economy will bounce back, although the rebound may be less dynamic than the one that followed the 2020 lockdown.
Following the announcement, the AUDUSD dropped from .7275 to a low of .7260 after the RBA reinforced its support for the economy and dovish guidance.
The market remains heavily short of the AUDUSD and should the AUDUSD break above the .7320/40 resistance area, it may prompt some short covering back towards .7450.
Until then, however, the AUDUSD remains vulnerable to a retest of the August .7106 low.
Source Tradingview. The figures stated areas of October 5th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
StoneX Financial Ltd (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.