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Despite the RBA delivering a rate cut that was only priced as a low probability a week ago, AUD/USD is up slightly, recapturing the 0.66 handle. To a large degree, this is due to the greenback’s lurch lower, in the opinion of analysts at Westpac Institutional Bank.

Key quotes

“The global mood swing against the US dollar is likely to extend near term, pressuring what were record real money A$ shorts on CME. But the broader picture remains bearish for AUD crosses.”

“This week’s RBA cut left its post-summer message of optimism in tatters. We look for a further cut to the 0.25% lower bound in April.” 

“Investment and construction were falling even before the bushfires and Covid-19 sledgehammer to Q1 growth. Look for choppy trade either side of 0.6600 near term, with squeezes offering opportunities for better levels to sell. Sub-0.64 still a reasonable multiweek target.”