- RBA cuts interest rates by 25 bps, as was widely expected.
- Dovish policy statement prompts some aggressive selling.
- The ongoing USD bullish run adds to the bearish pressure.
The AUD/USD pair faded the post-RBA bullish spike and tumbled to near one-month lows in the last hour, with bears now eyeing a follow-through weakness below the 0.6700 handle.
The pair initially popped to an intraday high level of 0.6776 after the Reserve Bank of Australia (RBA), as was widely expected, delivered a 25 bps rate cut at the conclusion of its October policy meeting this Tuesday. The uptick, however, turned out to be short-lived, rather met with some fresh supply in reaction to a dovish tilt in the accompanying policy statement.
Dismal data/dovish RBA statement exert some heavy pressure
The RBA and expressed concern about job growth and reiterate that an extended period of low-interest rates will be required. This coupled with a duo of dismal Australian economic data released earlier this Tuesday – September manufacturing PMI and Building Permits for August – weighed on the domestic currency and prompted some aggressive selling at high levels.
On the other hand, the US Dollar remained well supported by a strong follow-through pickup in the US Treasury bond yields and rose to its highest in more than two years. Meanwhile, growing optimism about a possible resolution of the prolonged US-China trade disputes did little to lend any support to the China-proxy Aussie or ease the prevalent bearish pressure.
With Tuesday’s downfall, the pair now seems vulnerable to head back towards challenging multi-year lows as market participants now look forward to the US economic docket – highlighting the release of ISM manufacturing PMI – in order to grab some short-term trading opportunities later during the early North-American session.
Technical levels to watch
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