AUD/USD falls sharply to 0.76 after the RBA sounds
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AUD/USD falls sharply to 0.76 after the RBA sounds

The Reserve Bank of Australia left interest rates unchanged, as widely expected. However, the team led by Phillip Lowe disappointed Aussie bulls by not providing a hawkish tone.

Contrary to the ECB and the BOE, the RBA was not optimistic. On the contrary, they were worried about future employment growth and the current absence of significant wage growth. It remains low and will likely stay as such.

Housing issues

This slow growth of wages is holding back demand and also contributing to growing household debt, a warning sign also for the housing market. They repeated their stance that house prices are rising “briskly” in some markets.

How will the RBA tackle the growth in debt related to housing? More supervisory measures. If the RBA tightens the screws via macro-prudential measures, there is no need to raise rates.

Here is a key paragraph from the statement:

Growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of household indebtedness. Lenders have also announced increases in mortgage rates for investor and interest-only loans

AUD/USD downfall

AUD/USD reverses previous gains and falls sharply, trading just above 0.76. Support awaits at 0.7590, followed by 0.7540. Will it continue falling?  Resistance awaits at 0.77, followed by 0.7740.

More:  AUD: Domestic Vs External Drivers: Where To Target? – Barclays

Here is how it looks on the 30-minute chart:

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.