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As expected by economists and market participants Reserve Bank of Australia (RBA) has kept policy rates on hold at 2.25%.
- Aussie flew from its intraday low around 0.757 and traded around 0.771 post RBA decision. However pair is struggling to solidify gains above 0.77, currently trading at 0.768.
Overall trend remains downwards, possibilities are high that rallies will remain capped. Contrasting economic fundamentals and monetary policy will be keeping the pair pressed to downside.
Important short term resistance area is around 0.79-0.80, however 0.766-0.77 would continue to pose some resistance as of now.
Key highlights from RBA statement -
- RBA takes note of worsening terms of trade with falling key commodity prices.
- Growth in Australia is below trend and business capital expenditure is weak.
- Lower rates are boosting housing prices and lending in the sector, RBA will be working with regulators to contain risks from housing markets.
- Inflation and employment will remain weak.
According to RBA, Aussie is still strong compared to a basket of currencies other than the dollar. Central Bank also kept the policy easing door open for future.
