MAs Stop AUDUSD, Dovish RBA Rate Decision Send It Down
AUD/USD continues to make lower highs and yesterday’s surge on more Chinese stimulus faded once again, as the price failed to move above 0.65, while the RBA statement sent it lower after some dovish comments.
The AUD/USD pair faced sustained bearish pressure last week, culminating in a break lower. This move followed two weeks of consolidation, which brought the pair close to its yearly low of 0.6350. However, a soft inflation report from China, highlighting weakening consumer demand, helped cap the downside momentum.
Impact of China’s Monetary Policy
Yesterday’s announcement of further monetary easing by China provided a significant boost to the AUD/USD pair, causing it to surge nearly 1 cent higher. This development reflects optimism over potential improvements in economic conditions in Australia’s largest trading partner, temporarily alleviating bearish sentiment.
AUD/USD Chart H4 – MAs Continue to Push the Highs Lower
On the technical front, moving averages on the H4 chart have acted as resistance, suppressing highs and maintaining the downward trajectory. Fundamental challenges persist as well. Australia’s Q3 GDP report, released last week, painted a gloomy picture:
- Real GDP Growth (seasonally adjusted) slowed to 0.8% year-over-year, down from 1.0% in the previous quarter and below the 1.1% forecast.
- Weakness in household consumption continues to weigh on the economy, with private spending showing little to no growth.
While China’s monetary loosening has provided a short-term lift, the Australian economy’s structural challenges and technical barriers for the AUD/USD suggest limited upside potential. Early this morning the RBA held their meeting, with no expectations of a rate cut leading to it.
Reserve Bank of Australia December 10 Monetary Policy Meeting
Monetary Policy Decision
- The RBA kept its cash rate steady at 4.35%, in line with market expectations.
Inflation and Economic Conditions
- Underlying inflation remains elevated, though recent data suggest it is gradually easing as forecasted.
- Economic activity data have been mixed, leaning softer than anticipated in November.
- Wage pressures have moderated more than expected, according to the November Statement on Monetary Policy (SMP).
Outlook and Risks
- The RBA acknowledges persistent uncertainty regarding both domestic and global economic outlooks.
- While the board is gaining confidence in the decline of inflationary pressures, risks remain a central focus.
Policy Stance
- The board maintains that monetary policy is restrictive and continues to work as intended.
- Future decisions will be data-driven, with evolving risk assessments shaping the RBA’s approach.
AUD/USD Live Chart
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