The Reserve Bank of Australia (RBA) Governor Phillip Lowe’s speech is expected to be closely eyed, especially after the Australian central bank delivered a rate cut earlier today amid growing economic growth concerns.
The RBA cut its Official Cash Rate (OCR) by 0.25bps to a record low of 1.25% at the June monetary policy meeting held earlier this Tuesday. It was the first rate cut after thirty straight meetings of RBA standing pat on the interest rates.
Lowe is due to speak at the RBA Board Dinner with the business community at 0930 GMT, which will be followed by the Q&A session with the media, starting 0950 GMT. Therefore, the speech is likely to be for approximately 20 minutes.
Markets would closely hear his take on the Australian interest rates outlook in the coming months should he say that more rate cuts are required to spur the economic growth amid ongoing US-China trade war.
How could it impact AUD/USD?
The Aussie faded a knee-jerk spike to three-week tops at 0.6994 and now consolidates near 0.6980 levels, as markets adopted “Buy the fact, sell the rumor” strategy on the RBA rate cut announcement.
According to Anil Panchal, Analyst at FXStreet, “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.”
Key Notes
Aussie hits fresh 3-week tops even as Reserve Bank of Australia cuts rates to 1.25%
CBA and NAB cut key mortgage rates by 25bps, follow ANZ
Australian Treasurer Frydenberg: Rate cut welcome news for households, business
Australia’s retail sales drop 0.1% in April, a big miss
About Lowe’s speech
Philip Lowe replaced Glenn Stevens as governor of Australia’s central bank. Lowe was the Deputy Governor of the Reserve Bank of Australia, a position he held since February 2012. Usually, if he shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish is seen as negative (or bearish).
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