The Reserve bank of Australia cut the official cash rate by 25bps to 3.5% as many expected. Others anticipated a 50bp cut. The interest rate policy therefore came as no surprise. The statement cited the moderation in China’s growth and declining commodity prices weighing on the Australian economy and terms of trade.
The market reacted first with AUD-weakness, but immediately flipped and whipped up AUD-strength. Let’s take a look at the Aussie-crosses: AUD/USD, AUD/CAD, AUD/JPY, AUD/NZD, EUR/CAD, and GBP/AUD
AUD/USD 15-minute chart 12:53AM EDT 6/5/2012
The AUD/USD first dipped to the 0.9720 level before jumping to the 0.9787 level, as seen in the 15-min chart. The market has bullish bias in this time-frame, and so far it appears the AUD/USD is on its way to test the 0.98 handle. Above that the next resistance pivots have been seen at the 0.9886-0.9896 area. This would be last week’s high.
AUD/CAD 15-minute chart 12:53AM EDT 6/5/2012
The AUD/CAD also started with Aussie-weakness and turned it around to break the session high and touch 1.0140. You should note that on the daily chart that the AUD/CAD had broken above a declining trendline, and is now basically showing the market’s very recent demand for the Aussie.
AUD/CAD daily chart 12:53AM EDT 6/5/2012
The daily chart shows that the market is consolidating with the 1.0150 area showing key resistance. Then, there is a pivot at 1.0182. The market might be staying around here, under 1.02 before the Bank of Canada announces its policy stance at 9:00AM EDT 6/5. A BoC that sounds more dovish might give the AUD more of a chance to continue into the direction of the breakout.
The Australian Dollar versus the Japanese Yen pair first dipped to 76.05 then rebounded to clear the session high and touched 76.65 in the immediate reactions. This near-term bullish bias is part of a short-term correction against a downtrend that started in March 2012. The next near-term resistance might be around the 77.00 level.
AUD/NZD 1H Chart 1:15 6/5/2012
AUD/NZD also cleared session high after an initial dip, confirming an inverted head and shoulder, and is rading at an important resistance level seen in the 1H chart. It is a declining trendline, and the 200-hour simple moving average, and it is around the psychological pivot of 1.29. After that, there has been resistance seen at 1.2924.
EUR/AUD 15-min Chart 1:21 6/5/2012
The EUR/AUD first attached this week’s high and fell right back down toward a range consolidation support area. A break below 1.2790 can constitute as a double top. The first near-term pivot area can be at 1.2770, but a break below 1.2750 might in the short-term open up recent lows around 1.2680.
GBP/AUD 15-min Chart 1:27 6/5/2012
The GBP/AUD has recently topped off with a double top and is now accelerating downwards the 1.57 psychological support. A conventional pattern breakout projection using the width of the breakout targets roughly 1.56.
The 4H chart shows retracement levels of the bull run since the February low of 1.4547 to the May high of 1.6182, 38.2% being at 1.5557.