The Australian dollar is on a roll, extending gains after the weak US manufacturing PMI, and defying quite a few negative factors. The fall of US manufacturing into contraction zone according to ISM caused many to re-assess the chances for QE tapering. The news already triggered a fall of USD/JPY below 100.
It is already up 1.8% or over 150 pips and trading at 0.9750. This is a big one day move that stands out on the daily chart.
This big move comes on the eve of the RBA rate decision. The previous decision on May 7th resulted in a cut of the interest rate to 2.75%, a new post financial crisis low. This in turn, resulted in the Aussie crash of around 700 pips.
One of the reasons for the cut was the high value of the Aussie. This time, the consensus of economists is that the RBA will adopt a “wait and see” approach, especially as the A$ is weaker.
Could this surge change the minds of policymakers at the central bank? Probably not, but they could be wary of the recovery of the Aussie and send a warning message regarding its strength.
AUD/USD daily chart:
Get the 5 most predictable currency pairs