Aussie under pressure as chances of June rate cut increase
|AUD - Australian Dollar
The Australian Dollar continued the months downward trend and opens this morning at 0.6882, not too far away from its recent lows. The Aussie had recovered marginally in previous sessions but was ultimately led lower by the RBA with the Meeting’s Minutes abstaining from using the words “not a strong case”. The words were previously included in RBA communication when referring to near term rate cuts, and the omission of “not a strong case” has led to some market participants seeing this as the first step towards a June rate cut. The RBA did however emphasize that a rate cut would only be appropriate if the labour market didn’t improve, heightening the value of next months unemployment report. That being said, the 30-day interbank cash rate futures market is currently pricing in a 92% chance of a rate cut to 1.25% in June.
Moving into Wednesday the Aussie has little to digest domestically although will have Q1 Construction Work Done and a Westpac Leading Index for April to look forward to. Looking at the technicals the Aussie looks to be in bearish territory although momentum indicators suggest it is slightly oversold.
Key Movers
The Great British Pound continued its’ negative run despite a spike during May’s new Brexit plan presentation. Opening this morning at 1.2705, the Sterling initially enjoyed a healthy recovery to 1.2813 but was ultimately unwound as the session continued. Prime Minister May’s new plan unfortunately didn’t help create any positive expectations and neither did it remove any political uncertainty. Labour leader Jeremy Corbyn has also said that Labour cannot support the deal.
Across the Atlantic, the Greenback also enjoyed some marginal gains after the US Commerce Department granted Huawei a temporary licence to buy goods until August 2019. The three-month window will also allow Huawei to maintain its existing networks and receive Android software updates to its existing mobile device, minimising disruptions for its customers are the world. Wall Street and the Greenback both benefited from the news.
Expected Ranges
AUD/CAD: 0.9140 - 0.9278 ▼
AUD/EUR: 0.6125 - 0.6197 ▼
AUD/GBP: 0.5389 - 0.5447 ▲
AUD/NZD: 1.0531 - 1.0612 ▲
AUD/USD: 0.6854 - 0.6939 ▼
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