Sean Callow, analyst at Westpac, points out that the RBA statement sparked a bounce to 0.6710/15, presumably reflecting the 10% chance of a rate cut implied by money markets and language that reiterated the easing bias but offered no specific hint about when another move might come.
Key Quotes
“The market turmoil of the past month, mostly driven by a deterioration in US-China trade relations, was barely evident in the discussion of the global economy. Governor Lowe repeated August’s observation that, “The Australian dollar is at its lowest level of recent times.” Last week Deputy Governor Debelle said that further depreciation would be helpful.”
“Looking forward, markets will continue to price another RBA rate cut before year end but even before the next RBA meeting we should see the Fed lower rates again. Indeed yield spreads have moved back in AUD’s favour over the past month as trade wars are judged to have greater implications for the Fed than the RBA with the cash rate already at 1%.”
“With iron ore prices on track to recover some more lost ground, spec positioning firmly short AUD and resource company dividend payments to Australian shareholders due in the next couple of weeks, AUD/USD should continue to find buyers on dips under 0.6700. But the global mood seems too risk-averse for rallies to extend beyond the 0.6780/90 area near term.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
Recommended content
Editors’ Picks
GBP/USD holds losses near 1.3400 ahead of BoE’s policy decision
GBP/USD remains subdued for the third consecutive session, trading around 1.3410 during the Asian hours on Thursday. The pair faces challenges as the US Dollar gains ground amid increased safe-haven demand, driven by escalating tensions between Israel and Iran.
EUR/USD extends downside to near 1.1450 ahead of ECB’s Lagarde speech
The EUR/USD pair extends the decline to near 1.1465 during the Asian session on Thursday. The Euro weakens against the Greenback amid the risk-off mood due to rising geopolitical tensions in the Middle East. Traders await the speeches from the European Central Bank policymakers later on Thursday for fresh impetus.
Gold price struggles to build on modest intraday gains amid mixed fundamental cues
Gold price edges higher during the Asian session, though it lacks follow-through buying. Trade uncertainties and rising geopolitical risks underpin the safe-haven precious metal. The Fed’s hawkish pause lifts the USD to over a one-week high and caps the XAU/USD.
Ethereum stays muted as uncertainty from Middle East crisis weighs on market sentiment
Ethereum is experiencing calmness in its on-chain metrics following an extended period of price consolidation that has spanned the past six days after dropping from above $2,700.
In the Eurozone, inflation is also a monetary phenomenon
Monetary aggregates continue to be closely monitored by the European Central Bank (ECB), a sign that, despite the passage of time and the increasing complexity of financing circuits, quantitative theory remains relevant.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.