The Australian Dollar Is Higher After The RBA Signaled No Rate Cut

By Axi (Greg McKenna)Market OverviewNov 01, 2016 15:22

au.investing.com/analysis/the-australian-dollar-is-higher-after-the-rba-signaled-no-rate-cut-200161556

The Australian Dollar Is Higher After The RBA Signaled No Rate Cut

By Axi (Greg McKenna) | Nov 01, 2016 15:22

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Originally published by AxiTrader

There was a chance the RBA would cut rates but no one really thought they would today.

However in the governors statement he was fairly relaxed about the jobs market, noted low inflation seems to be an offshore phenomenon, said the Australian dollar’s fall since 2013 is still supporting growth – it certainly is – and said even though housing prices are rising again in some parts of the country overall new supply should dampen that in time.

But the key paragraph, the one that has helped the Australian dollar climb 0.49% on the day into 0.7640’s is the one where governor Lowe says there is no need for the bank to change its forecasts from 3 months ago.

“The Bank's forecasts for output growth and inflation are little changed from those of three months ago. Over the next year, the economy is forecast to grow at close to its potential rate, before gradually strengthening. Inflation is expected to pick up gradually over the next two years” he said.

That’s a clear hint that the quarterly statement on monetary policy to be released Friday won’t contain any surprises or hints of rate cuts.

The RBA is comfortably on hold over summer and will reassess the outlook in 2017.

Looking at the daily AUD/USD chart we see the bounce off support on Friday night but it is still trapped below the supply zone above 77 cents.

So for the moment we are trapped within this wedge. Most chartists would be looking for a downside resolution. But I'll go with which ever side breaks. Until then the McKenna Mantra applies - respects trendlines and levels unless or until they break.

Chart

Have a great day's trading

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The Australian Dollar Is Higher After The RBA Signaled No Rate Cut

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