- AUD/USD has managed to hold in positive territory ahead of the Aussie GDP.
- The RBA sent AUD to the highest levels in days, testing a key resistance in 0.6860.
Risk assets were under pressure again as trade uncertainty ripped through markets although the Aussie maintained most of its post RBA event form, despite optimism about getting a trade agreement between the US and China in the near term receded further. AUD/USD is entering Asia in a consolidation around 0.6840.
Australian Q3 GDP Preview: Data could cement further rate cuts from RBA and weigh on AUD
AUD/USD has managed to hold in positive territory as traders await the Gross Domestic Product data for Q3 due at 00.30 GMT today. Yesterday, the RBA Board kept the cash rate at 0.75% in December. On the back of some changes to the statement justifying the hold, the Aussie ran up to a fresh three-week high meeting a 61.8% Fibonacci retracement of the late Oct swing highs and late November low. However, prices moved back to a 50% mean reversion level of the same range at 0.6840 as profit-taking ensued ahead of the GDP data.
Key notes from RBA statement
- The AUD and interest rates jumped on the statement.
- AUD/USD was trading at 0.6820 and rallied to 0.6862.
- The comment that “while the [global]risks are still tilted to the downside, some of these risks have lessened recently,” was a driver.
- House prices “have also increased recently” was another positive in the statement.
- The statement about employment continuing “to grow strongly” has been removed entirely, yet market did not seem to capture that and could be a risk going forward.
- In the statement, the change to the last paragraph was made, stating, “the long and variable lags in the transmission of monetary policy” – could also have been a bullish factor for AUD as being a reason to hold.
AUD/USD bulls can look for a break of the 2019 downtrend around 0.6890 ahead of the descending 200-day moving average located around 0.6920. On a bearish outcome, initial support offered by the 50-day moving average and convergence of the 21-hour moving average comes in at around the day’s lows of between 0.6815/30.