Australian Dollar: USD/AUD (AUD=X) Reserve Bank turns ‘dovish’ on economy
It was buying 70.69 US cents at 7:15am (AEDT), a significant drop from yesterday’s 71.11 US cents.
The dollar also experienced steep falls to 53.83 British pence (-0.6 pc), 63.09 euro cents (-0.5 pc), and 78.72 Japanese yen (-0.6pc).
Currency traders sold the Australian dollar after noticing a “dovish” change in language in the RBA governor Philip Lowe’s post-meeting statement.
In particular, analysts noticed Dr Lowe did not mention the Australian economy growing at 3 per cent this year — a subtle omission compared to his previous statements — and spoke of a divergence between labour market and GDP outcomes.
“The [Reserve] Bank has acknowledged for the first time that the housing downturn is weighing on consumption and we also got a re-write of the final paragraph [of the statement] for the first time in ages,” NAB foreign exchange strategist Rodrigo Catril said.
He noted an important change in the final paragraph of the RBA governor’s post-meeting statement:
“The board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time.”
Mr Catril said “the market has interpreted [that] as a nod to [the RBA] being open about considering future rate cuts”.
Many economists now expect the RBA to cut interest rates at least once by the end of this year.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 0.72.
The projected lower bound is: 0.70.
The projected closing price is: 0.71.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 55.4691. This is not an overbought or oversold reading. The last signal was a sell 13 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.59. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 73 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 62. This is not a topping or bottoming area. The last signal was a sell 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 14 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.000 at 0.711. Volume was 98% below average (consolidating) and Bollinger Bands were 62% narrower than normal.
Open High Low Close Volume___
0.711 0.711 0.711 0.711 1,584
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.71 0.71 0.72
Volatility: 8 10 10
Volume: 92,864 100,956 107,773
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX AUD= is currently 1.3% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into AUD= (mildly bullish). Our trend forecasting oscillators are currently bullish on AUD= and have had this outlook for the last 7 periods.
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