Currency Trading Commentary: April 03
The AUDUSD arrested its declines around 1.0300 late last week.
Yesterday, the pair gapped up to a high around 1.0460 on the back of Sunday’s stronger-than-expected Chinese manufacturing data.
There has since been a deterioration in the price action, following today’s RBA’s interest rate decision.
As expected, the central bank left the official cash rate on hold at 4.25%.
The RBA noted the recent improvement in capital markets and discounted the possibility of a deep global downturn.
Yet in what can be interpreted as a dovish signal, central bank officials said further easing would depend on this month’s 1Q CPI data.
Given the recent sluggishness of the Australian economy, the odds of a high CPI reading would be considered low at the present time.
We have included a 5 minute chart to highlight the impact of the RBA comments on the Aussie dollar.
When it was initially revealed there was no rate cut, the pair spiked up to a high of 1.0466.
Once the RBA comments filtered through, the price action quickly headed south as traders began pricing in the odds of a rate cut next month.
Currently, the AUDUSD is trading just above 1.0400.
The next likely downside targets come in at 1.0250-60 initially, followed by 1.0111-40.