FxWirePro: Aussie bears likely to struggle to clear 0.675 support area

Aussie bears are all energized today,

• Riding on speculations that the Reserve Bank of Australia (RBA) would move away from the current neutral policy stance to a more dovish one.
• Top market analysts are projecting rate cuts, especially after today’s GDP data, which showed that the economy grew only 0.2 percent in the fourth quarter, up 2.3 percent from a year ago. This was the weakest pace of growth, since the second quarter of 2017. Westpac, JP Morgan, UBS, Nomura, AMP, Capital Economics, Macquarie, and Market Economics - all have forecasted rate cuts, with some even calling for 50 bps cut in 2019 alone.
• In addition to that, China’s economic slowdown and worsening political relations between the two countries over restriction to Chinese investments, and technology companies like Huawei, also weighing on the Aussie.

Despite all the bearish forecast, we expect the Aussie bulls to hold strong, especially around 0.7 and 0.675 area, as the market analysts might be overpricing cuts.

• The Reserve Bank of Australia’s (RBA) policy statement, released yesterday wasn’t bearish enough. Instead, RBA is quite aware that there could be a slowdown in the near term and the policymakers surely had their hands on the GDP data.

However, it is important to note that the bears have cleared significant support just above 0.7 psychological area.