Home AUD Post-RBA: Why Is The Bounce? What’s Next? – BNPP
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AUD Post-RBA: Why Is The Bounce? What’s Next? – BNPP

The Reserve Bank of Australia cut the interest rate as expected but  the Australian dollar bounced higher. What is going on?

The team at BNP Paribas explains:

Here is their view, courtesy of eFXnews:

Assuming that one of the RBA’s main goals in cutting interest rates by 25 bps this morning is to weaken the currency, that goal is not looking positive, notes BNP Paribas.

Why is the bounce?

This morning’s subsequent rally in AUD is a likely response to the statement not providing an indication of a further rate cut, which we think is disappointing the market. While RBA views the AUD should move lower, there is no commitment to cut rates to help it get there,” BNPP adds.

What’s next?

Our forecast for US NFP’s to hit 275K this week could be a near-term catalyst for the USD to begin rallying and for AUDUSD to fall. The RBA could clearly help by reinstating its dovish rhetoric on Friday with its Monetary Policy report,” BNPP projects.

Our indicator signals that AUD positioning has been pared back almost to flat (-2) since the start of April. There is considerable potential for AUDUSD shorts to build,” BNPP argues.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.