AUD/USD pops and drops after RBA matches market consensus of a 0.25% rate cut

The AUD/USD pair’s initial reaction to the rate cut decision fails to last-long.
Early-day Aussie data have been mixed.
Trade/political headlines, RBA’s Lowe’s speech, US PMI will be in the spotlight for now.

Anil Panchal FXStreet

With the RBA matching most market consensus, AUD/USD stays little changed around 0.6750 ahead of the European opening on Tuesday.

The Aussie central bank marched wide market expectations of a 25 basis points’ (bps) cut to its benchmark Cash Rate. However, investors seem more concerned with the RBA Rate Statement that mentions “gentle turning point appears to have been reached.”

With this, the quote initially surged more than 30 pips to 0.6776 but later on witnesses pullback to near-0.6750 area.

Earlier during the day, upbeat readings of Australia’s September month Purchasing Managers’ Index (PMI) from AiG and Commonwealth Bank confronted disappointing Building Permits for August. As a result, China’s absence from markets curbed the Aussie momentum.

Following the initial reaction to the Reserve Bank of Australia’s (RBA) latest monetary policy decision, the AUD/USD pair traders will now await statements from the Govern Philip Lowe, who is scheduled to speak at the RBA Board Dinner around 09:20 GMT. Furthermore, the US ISM Manufacturing Purchasing Managers’ Index (PMI) for September, expected 50.00 versus 49.1, will also be entertaining the traders during the day.

Technical Analysis

An upside clearance of 23.6% Fibonacci retracement of July-August downside, near 0.6770, becomes necessary for the AUD/USD pair to register fresh pullback targeting 21-day simple moving average (SMA) level around 0.6810, failure to which can keep exerting downside pressure on the pair towards 0.6740/35 and 0.6700 supports.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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