AUD/USD: Potential RBA rate cut overshadows resilient Australian data
|Australian upbeat data was overshadowed by RBA’s Governor Lowe hinting more stimulus. Mounting tensions between Canberra and Beijing could put extra weight on the aussie which is holding above 0.7000 but could turn bearish mid-term once below it, FXStreet’s Chief Analyst Valeria Bednarik reports.
Key quotes
“The commodity-linked currency declined after the Reserve Bank of Australia’s Governor Philip Lowe hinted an upcoming rate cut. Lowe said further monetary easing would support jobs growth and alleviate currency pressures, hinting a possible cut to a record low of 0.1%. Extraordinary monetary stimulus is no surprise to investors in the current pandemic scenario that put the world in recession.”
“Not only the US government delayed additional stimulus, but also the number of new coronavirus cases reached a fresh record daily high of 380K. In that particular front, Australia is doing much better than its overseas rivals, as the country has reported 20 new cases a day on average in the last couple of weeks. Another negative factor for the aussie came from news indicating that China has banned imports of Australian coal.”
“Australian macroeconomic figures were mostly encouraging, as Westpac Consumer Confidence printed at 11.9% in October, above the 9.9% expected, although below the previous 18%. Consumer Inflation Expectations in the same month improved to 3.4% from 3.1%. Also, the September employment report showed that the country lost 29.5K job positions, less than the -35K expected, while the unemployment rate ticked higher from 6.8% to 6.9% better than the 7.1% expected.”
“The 0.7000 threshold is the immediate support level, en route to 0.6920. Below this last, the pair has room to extend its decline to 0.6840. The initial barrier to the upside is 0.7130, followed by 0.7200 and the 0.7250 price zone.”
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