AUDUSD Nosedives As RBA Rate Surprises With A Rate Cut
Aayush Jindal
Key Highlights
RBA Interest Rate Decision announced by the Reserve Bank of Australia surprised the Forex market, as the central bank decided to reduce cash rate by 25 basis points to 2.25 percent.
Australian dollar reacted sharply after the announcement and plunged by more than 100 pips.
Australian trade balance was released by the Australian Bureau of Statistics, which registered a deficit of -436M, compared to the expectation of -775M in December 2014.
RBA Interest Rate DecisionEarlier during the Asian session, the RBA Interest Rate Decision was lined up in which the market was not expecting any change in the interest rates. However, the central bank surprised investors by reducing cash rate by 25 basis points to 2.25 percent. The report highlighted that in Australia growth rate is continuing at a below-trend pace, which can be considered on the disappointing side as the CPI posted the lowest increase for several years in 2014 recently. The central bank also pointed out the Aussie dollar value by saying that “Australian dollar has declined noticeably against a rising US dollar over recent months, though less so against a basket of currencies”.Australian Trade BalanceMoreover, the Australian trade balance report was also released earlier by the Australian Bureau of Statistics. The outcome was better than forecast, as the trade deficit posted a reading of -436M whereas the last revised reading was -1,016M. Furthermore, the balance on goods and services was a deficit of $830m in December 2014, down by $129m compared with November 2014 according to the report.Technical AnalysisThe AUDUSD pair fell sharply after the interest rate decision. It moved below the 0.7700 level to challenge the 0.7650 support area. The next level of interest is around 0.7600 with immediate resistance at 0.7700. No doubt the pair is under bearish pressure and might head lower moving ahead. Hourly indicators are pointing oversold conditions, but in such conditions, it hardly matters.A break of the 0.7650 level might open the doors for a test of the 0.7600 support area.US IBD/TIPP Economic Optimism IndexLater during the NY session, the US Economic Optimism Index will be released by The Investor's Business Daily (IBD) TechnoMetrica Institute of Policy and Politics (TIPP). The last reading stands at 51.5 so any higher reading might call for more USD gains moving ahead.
Australian Trade BalanceMoreover, the Australian trade balance report was also released earlier by the Australian Bureau of Statistics. The outcome was better than forecast, as the trade deficit posted a reading of -436M whereas the last revised reading was -1,016M. Furthermore, the balance on goods and services was a deficit of $830m in December 2014, down by $129m compared with November 2014 according to the report.Technical AnalysisThe AUDUSD pair fell sharply after the interest rate decision. It moved below the 0.7700 level to challenge the 0.7650 support area. The next level of interest is around 0.7600 with immediate resistance at 0.7700. No doubt the pair is under bearish pressure and might head lower moving ahead. Hourly indicators are pointing oversold conditions, but in such conditions, it hardly matters.
A break of the 0.7650 level might open the doors for a test of the 0.7600 support area.US IBD/TIPP Economic Optimism IndexLater during the NY session, the US Economic Optimism Index will be released by The Investor's Business Daily (IBD) TechnoMetrica Institute of Policy and Politics (TIPP). The last reading stands at 51.5 so any higher reading might call for more USD gains moving ahead.
Australian Trade BalanceMoreover, the Australian trade balance report was also released earlier by the Australian Bureau of Statistics. The outcome was better than forecast, as the trade deficit posted a reading of -436M whereas the last revised reading was -1,016M. Furthermore, the balance on goods and services was a deficit of $830m in December 2014, down by $129m compared with November 2014 according to the report.Technical AnalysisThe AUDUSD pair fell sharply after the interest rate decision. It moved below the 0.7700 level to challenge the 0.7650 support area. The next level of interest is around 0.7600 with immediate resistance at 0.7700. No doubt the pair is under bearish pressure and might head lower moving ahead. Hourly indicators are pointing oversold conditions, but in such conditions, it hardly matters.
A break of the 0.7650 level might open the doors for a test of the 0.7600 support area.US IBD/TIPP Economic Optimism IndexLater during the NY session, the US Economic Optimism Index will be released by The Investor's Business Daily (IBD) TechnoMetrica Institute of Policy and Politics (TIPP). The last reading stands at 51.5 so any higher reading might call for more USD gains moving ahead.