RBA Cuts Rate by 25 bps, AUDUSD Hit Monthly Lows
AUDUSD finished yesterday’s trading almost unchanged as the euphoria following the US-China phase one deal faded. The currency pair met resistance around the 0.6900 handle and settled at 0.6883 by the end of the New York session. It was only 3 pips higher than where it opened for the day.
Risk appetite was slightly up in yesterday’s Asian session as investors digested the phase one deal announced by the US. However, later on in the day, it seemed that market participants grew unimpressed by the agreement. Remember that the US announced a rollback in tariffs and cancellation of additional levies. Meanwhile, China agreed to buy up to 200 billion USD-worth of US goods until 2021.
As of this writing, AUDUSD is trading 16 pips lower from its opening price below 0.6870 after the RBA meeting minutes were released.
In the last RBA rate decision, the central bank kept rates at their current record-lows at 0.75%. Policymakers said that they will assess economic conditions before making any changes to their monetary policy. This indicates the central bank’s willingness to ease monetary policy if needed. In fact, some market participants think that we could hear a rate cut in the first quarter of 2020.
Now remember that in October, the employment report showed a 19,000 contraction in jobs. Another disappointing jobs report could spark speculations that the central bank may soon ease rates sooner or maybe even resort to quantitative easing.
Data for November is due on Thursday at 12:30 am GMT. A figure of 15,200 is expected for the month.
Read our Best Trading Ideas for 2020.
On the hourly chart, we can see that AUDUSD is testing its December 13 lows. The area around .06850 to 0.6860 also coincides with the currency pair’s previous highs. AUDUSD hit resistance in this area last December 3 to 5. Now, if there are not enough buyers in the market and support does not hold at this level, the next near-term support will be at the rising trend line around 0.6835.
On the other hand, reversal candles could indicate that the market is getting ready to push AUDUSD back up to its multi-week highs around 0.6935.