- AUD/USD seesaws near the nine-day high.
- Fed delivered a surprise/shock rate cut of 50 bps, emergency funding bill is also on the cards.
- RBA announced a 0.25% rate cut with Aussie PM Morrison ready for fiscal measures to counter coronavirus risk.
- Aussie Q4 GDP, China Caixin Services PMI and US data will decorate the economic calendar.
Following its run-up backed by Fed’s surprise rate cut, AUD/USD retraces to 0.6600 at the start of Wednesday’s Asian session. The RBA’s 0.25% rate cut couldn’t deter the Aussie pair buyers as the Fed delivered a 0.50% surprise cut. The market focus now turns to Australia’s fourth quarter (Q4) GDP while coronavirus (COVID-19) headlines can keep offering intermediate headlines.
After all, the Fed is a whale…
With its emergency 50 basis points (bps) rate cut, the US Federal Reserve triggered moves against the US dollar. The greenback weakness gained another support with US President Donald Trump staying ready for a coronavirus spending bill worth $8.5 billion.
The Fed’s move was the first since 2008 that superseded the RBA’s 0.25% rate cut announced during the early Tuesday.
Coronavirus fears prevail…
If someone expected wilder moves following the Fed’s shock rate cut, the reason to blame is the market’s worry concerning the COVID-19. The pandemic is spreading faster in the US, with 9 deaths and 27 confirmed cases, whereas the rest of the world, excluding China, has also registered a sharp increase in coronavirus cases.
While portraying a mix of market’s risk-off and an ex-USD move, the US 10-year treasury yields slumped to the fresh record low near 1.0% whereas Wall Street benchmarks failed to cheer the Fed’s rate cut.
It’s worth mentioning here that today’s Aussie Q4 GDP, expected 0.3% QoQ versus 0.4% prior, can open the doors for further stimulus from Australia, after RBA’s rate cut. The reason can be traced from Aussie PM’s signal to take fiscal measures on Tuesday. Other than that, the US services PMIs will also be the key to watch.
Technical Analysis
Despite rising to nine-day high, the AUD/USD pair still lags below a 21-day SMA level of 0.6650, not to forget the early February low surrounding 0.6600, which limit the pair’s short-term upside. As a result, the bears can look for a sub-0.6500 move in the case of disappointments.
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