AUD/USD flashes fresh 3-week high despite RBA’s 0.25% rate cut
|- The RBA announced a much-anticipated rate cut of 25 bps.
- The central bank avoids spreading much pessimism in the statement.
- Speech from the RBA’s Lowe will be observed closely.
Even if the Reserve Bank of Australia (RBA) announced a 25 basis points (bps) cut to its benchmark cash rate, the AUD/USD pair is on the bids near 0.6990 during early Tuesday.
The RBA has cited downside risks to economic growth due to trade tussles while praising Chinese efforts for economic improvement. The central bank yet again emphasized on employment data and targets medium-term inflation upside.
The Australian economic calendar flashed disappointing numbers during early-day as first-quarter current account deficit widened to -2.9 billion from -2.5 billion expected while April month seasonally adjusted retail sales lagged behind +0.2% forecast to -0.1%.
However, the risk tone remained a bit light ahead of the key events. The US 10-year treasury yields gained nearly 2 basis points from fresh 20-month low marked yesterday to 2.105% by the time of writing.
While RBA played its role to fuel market moves, traders may now look forward to the US factory orders for April and comments from the Federal Reserve Chairman Jerome Powell for fresh direction. The factory orders may contract to -0.9% from +1.9% earlier whereas comments by the Fed’s Powell will grab the spotlight amid latest talks of the Fed rate cut.
RBA Governor Philip Lowe will also be on the wires during the US session and might offer fresh clues for the Aussie central bank’s next moves.
Additionally, the US-China trade stalemate will also entertain market players. China continues to criticize the US trade protectionism when the US President is on his visit to the UK to promote his anti-China proposals.
Technical Analysis
Unless successfully clearing 50-day simple moving average (SMA) level of 0.7030, the Aussie pair is less likely to aim for 0.7080 level comprising 100-day SMA.
As a result, 0.6940 and 0.6900 round-figure can keep luring sellers ahead of diverting them towards May month bottom around 0.6860.
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