AUD/USD Analysis: RBA weighed the Aussie, China can save it
|AUD/USD Current Price: 0.7063
- Australia has a busy macroeconomic calendar ahead, but focus will be on the Chinese Services PMI.
- Wall Street's decline added pressure on the AUD at the end of the day.
The AUD/USD pair fell to 0.7052, its lowest in three weeks, following RBA's monetary policy announcement. The central bank left the cash rate unchanged at 1.5% as expected, although the wording in the accompanying statement had a dovish tilt that heightened expectations of a rate cut, the main reason behind Aussie weakness. Policymakers acknowledged softer economic growth, removing their forecast of local growth of around 3.0% for this year. "Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual," said Governor Lowe, who said that monetary policy would be set to support sustainable growth. Another dovish turn was seen in the language about the labor market, as despite improvement there remains strong, policymakers now expect wages growth to be a "gradual process."
Some encouraging headlines related to US-China trade talks failed to boost the pair. A US official said that, at this point, "a deal is more likely to go forward than not." The Australian macroeconomic calendar will be quite busy, as the country will release the AIG Performance of Services Index for March, previously at 44.5, February Retail Sales, seen up by 0.2%, and February trade data, with the monthly surplus forecast at 3,800M. China will release the Caixin Services PMI, foreseen at 52.3 vs. the previous 51.1. This last has more chances of moving AUD/USD than local data.
The pair bounced just modestly from the mentioned low, maintaining the sour tone ahead of the Asian opening as it hovers around 0.7060. In the 4 hours chart, the bearish case is firming up, as the price is now below all of its moving averages, while the Momentum indicator maintains a strong bearish slope well below its midline, as the RSI hovers around 28 without directional strength.
Support levels: 0.7055 0.7020 0.6980
Resistance levels: 0.7090 0.7130 0.7170
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