Sep
7
2010

 

AUD/USD Sinks as RBA Stays Steady

The Aussie is back at .91 after the RBA kept its monetary policy unchanged.  The RBA did add that it will keep its monetary policy unchanged ‘for the time being’ to its statement, giving the current neutral stance a bit of temperance.  The RBA noted weakness in U.S. fundamentals as a reason for resisting another rate hike despite the continuation of impressive Australian economic data.  That being said, if U.S. fundamentals were to bottom and swing higher then the RBA would likely feel comfortable hiking its benchmark rate by another 25bp.  Additionally, if Australia’s CPI were to top 3% this would also force the RBA’s hand since the central bank’s top priority is maintaining steady price growth.  In addition to the RBA’s monetary policy decision investors are also digesting news that Gillard will remain Australia’s PM.  The decision helps clear up political uncertainty a bit even if parliament is still divided.  However, Gillard in charge may not necessarily be a positive for the Aussie since she favors taxing miners at a higher rate.  Meanwhile, investors should also keep an eye on wheat futures as they benefit from the supply shortage in Russia.  Australia is a large producer of wheat and the Aussie could benefit from higher prices as exports increase.  Australia will entertain the data wire again tomorrow by release a home loans figure.  If the number exceeds 1.1% this could help shore up present weakness in the Aussie as the likelihood of a rate hike from the RBA increases.    
Technically speaking, the Aussie faces technical barriers in the form of 9/6 and 8/6 highs.   As for the downside, the Aussie has multiple medium-term uptrend lines working in its favor along with 9/3 lows.  Meanwhile, the highly psychological .90 level becomes a technical cushion once again.  
Price: .9099
Resistances: .9114, .9127, .9135, .9147, .9164, .9175, .9186
Supports: .9096, .9087, .9076, .9059, .9047, .9035
Psychological:  .90, August Highs
 
 
 

 
Posted by: Matthew Myers

 

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