News

AUD/USD drops and pops as RBA matches consensus of 0.25% rate cut

  • The RBA cut its cash rate to a record low of 1.0%.
  • The Aussie central bank cites a reasonable outlook for the global economy.
  • The lack of guidance for future rate cuts grabs the spotlight.

The AUD/USD pair pops to 0.6980, after dropping to 0.6956, as the Reserve Bank of Australia (RBA) met market-wide expectations of 0.25% rate cut to its benchmark cash rate.

Investors seeking clues for additional rate cuts got nothing but disappointment as the central bank refrains from providing any fresh ideas while citing reasonable global economic outlook.

Solid figures of Australia’s May month HIA New Home Sales (MoM), 28.8% versus -11.8% prior, offered initial support to the Australian Dollar (AUD) that further gained traction from the US Dollar (USD) pullback amid doubts over the latest US-China trade truce.

Additionally, comments from the US President Donald Trump concerning Iran and his talk with France about the Arab country holding higher Uranium than mentioned in the nuclear deal also weigh on the greenback’s recent recovery.

With the RBA already out and loud, investors might emphasize on the Federal Reserve Bank of New York President John Williams’ speech for fresh direction in light of a recently upbeat reading of the US manufacturing gauge from the ISM.

It should also be noted that developments concerning the US-China trade will also be on the spotlight amid a lack of major economic data. Recently, US President Trump mentioned that negotiations have already begun via phone. However, China’s Huawei claims it has still not received any response from the US Commerce Department even after President Trump’s upbeat comments at the G20.

Technical Analysis

An upside clearance of 100-day simple moving average (100-DMA) level of 0.7034 can propel prices to April-end swing high of 0.7070 whereas Multiple levels ranging since mid-May can limit pair’s near-tern declines around 0.6940/35.

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