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Currency market: AUD/USD and RBA interest rates

The RBA raised 50 pips and AUD/USD range traded 35 pips. AUD/USD lacked ability to trade substantially in one direction. AUD/USD's price location, AUD/USD's interest rates and AUD/USD's Ma's informed AUD/USD's top at 0.6872, 0.6887 and 0.6911 were only viable options for shorts. AUD/USD traded to 0.6885 from 0.6850.

AUD/USD interest rates refers to present rates before the actual RBA announcement because I didn't have a clue if the RBA would move interest rates and present interest rates factors to current AUD/USD prices. Yet to factor old rates to new results in no AUD/USD price changes.

Why is because the RBA's main Cash rate target since June 8 traded 0.81 to 0.85 and currently 0.85. The difference between 0.81 and 0.85 to AUD/USD's price is exactly 1 pip. The 0.81 and 0.85 is the reason AUD failed to move and its the reason why AUD will trade the same old ranges from today to eternity.

The 0.81 and 0.85 is the RBA's strategy to maintain AUD in the same old ranges. Central banks don't want exchange rates to move so they adopt strategies through interest rates to prevent movements.

All central banks are different but use the same strategies. The RBNZ allows OCR to trade feely and its the RBNZ's strategy to hold NZD in tiny ranges. The ECB adopted STIR and Eonia to hold EUR/USD in tiny ranges, the Bank of Canada uses Corra and OMMFR or the overnight money market finance rate. The BOJ uncollaterialized call rates, The Swiss central bank uses Call money rtates and debt register claims. The FED uses Commercial paper and Fed Effective rates.

The joke to interest rates is any nation's interest rates factors to most currencies and reveals the distance betweem nation's interest rates is zero. Don't allow the eyes or the mind to deceive to what's actually happening before your eyes.

The RBA raised headline interest rates. Headline interest rates is never factored to AUD prices. The headline interest rate is a complete irrelevant interest rate. If the RBA raised 100 point, 200 then AUD at 0.85 would've traded 35 pips or more depending on moving averages and present interest rates.

AUD/USD dropped today due to AUD achieved its highs at the RBA announcement. Pages upon pages will be written today on the RBA's rate increase. Do yourself a favor. Don't read it and don't consume yourself with such nonsense as the vast majority don't know what they say nor what they do.

The overall is interrest rates are just numbers and matches to exchange rate numbers. By pencil, paper and calculator takes about 3 minutes to factor a day trade. Which means, anyone can factor and profit, including a child of 12. Nothing exists to sophistication or expertise except the how to knowledge.

Here's AUD/USD today and ask this question. Did the RBA, raise, lower or maintain current interest rates. The answer is irrelevant as the same old AUD trades today from yesterday and the day before. Matter of fact, the same old AUD ranges have been trading exactly the same for 10 and 40 years.

0.6770, 0.6796, 0.6809, 0.6823, 0.6831, 0.6836, 0.6838, 0.6840, and tops 0.6888 and 0.6893.

AUD currently trades at range lows, long is the only way. See cluster at 0.6836, 06838 and 0.6840. Should see longs for 50 pips easily. 

Author

Brian Twomey

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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