RBA Holds Steady, AUD/USD Rises
AUD/USD - H1
The Reserve Bank of Australia (RBA) opted to maintain interest rates at 0.1% and continue its asset purchases program at the rate of A$ 4 billion/week until at least mid-February 2022. [1]
The central bank sounded upbeat on economic conditions and employment, noting that "leading indicators point to a strong recovery in the labour market".
On the issue of the latest Covid-19 variant, it acknowledged that Omicron is a new source of uncertainty, but said that "it is not expected to derail the recovery".
RBA said that it will consider its bond buying program at the next meeting on February, a statement seen by many as a nod to the program's conclusion or at least continuation at a lowered pace.
The above factors, along with broader upbeat mood on hopes that the Omicron variant will not be particularly severe, help the Aussie.
Last week was the fifth straight negative one and had ended with a drop to the lowest level since November 2020. Yesterday though it staged a recovery, which it extends today, breaking above the EMA100 (black line).
This gives AUD/USD the chance to push for 0.7118-25, although sustained optimism is probably required for a larger correction towards 0.7173.
On the other hand, the rise looks overextend from a technical prospective, as the Relative Strength Index is overbought, creating risk for pullback to sub-0.7052 territory, but its 2021 lows (0.6990-2) appears remote at this stage.
Past Performance: Past Performance is not an indicator of future results.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 27 Jun 2022 https://www.rba.gov.au/media-releases/2021/mr-21-29.html |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.