RBA's Assistant Governor Kent: RBA to make modest changes to how it uses FX swaps

Reserve Bank of Australia's Assistant Governor (Financial Markets) Chris Kent is participating in the Australian Corporate Treasury Association (ACTA) roundtable webinar.

Key comments

AUD would be 5% higher if it wasn't for the RBA policy steps.

Policy measures continue to place downward pressure on the AUD.

AUD currently around the upper end of its range of recent years.

Reserve Bank of Australia assistant gov Kent says RBA to make modest changes to how it uses fx swaps.

Says stimulus policy measures continue to place downward pressure on the Australian dollar.

Estimates A$ 5% lower than otherwise in TWI terms.

Have decided to start acquiring foreign currency via swaps over longer terms.

To acquire long-term swaps over a period of weeks until that part of the portfolio reaches between US$3–4billion.

Transactions will have no effect on the value of the Australian dollar.

Kent says fiscal policy has a key role in recovery, very welcome.

Kent says need a tight labour market to get wages and inflation higher.

Kent says to take some time to close output gap.

Kent says to set monetary policy by focusing on domestic conditions.

Kent says if other central banks pull back on easing, that would lower A$.

Market implications

The Australian dollar is unchanged on the comments despite the jawboning.

That being said, it has already fallen in a significant move from the recent highs to test the 10-DMA and prior structure with a confluence of the 78.6% Fibonacci retracement level of the prior bullish impulse:

At this juncture, an upside correction to at least a 38.2% Fibonacci retracement of the recent bearish impulse might be expected if support holds:

4-hour chart

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.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD battles 1.21 after mixed US data

EUR/USD is trading above 1.21, choppy after US retail sales missed estimates with a drop of 1.3% but on top of upward revisions. Increases in producer prices accelerated last month.


GBP/USD bounces off two-month lows

GBP/USD has bounced off the fresh two-month low of 1.4034 but remains depressed. The delay in Britain's reopening is outweighing upbeat UK job figures. Tension is mounting ahead of the Fed.


XAU/USD looks to $1880 after recapturing $1858

Gold price is attempting a minor recovery above $1850, although the bulls appear to lack conviction, as the US dollar continues to hover near monthly highs.

Gold News

Bitcoin continues to range higher, but altcoins suffer

Bitcoin price has experienced a 32% upswing over the past six days and might retrace to gather more steam. Ethereum price performance is lackluster as it rallied roughly 17% in the same period as BTC.

Read more

Tesla still stuck in first gear

Tesla stock recovered last week as some investor enthusiasm finally returned to the stock with the release of the new Model S Plaid at Tesla's Freemont factory.

Read more