This gave a bit more colour to the RBA’s rate cut on Tuesday and saw expectations pared back around whether we can expect an immediate follow up to the February rate cut. From pricing in around a 32% chance of a March cut following the February cut, expectations dropped to 23% on the back of the statement.
While the RBA downgraded inflation and growth forecasts, it perhaps wasn’t as aggressive as the market was expecting. This suggests a wait-and-see approach is warranted. The RBA will be hoping other global forces will be enough to keep the AUD at bay in the near term, particularly as commodities continue to struggle.
AUD/USD rose to a high of $0.7859 but there is still no real conviction among the bulls. The range looks like it’ll be maintained heading into today’s non-farm payrolls data. I continue to feel any moves past $0.7900 could be used as opportunities for fresh shorts with stops placed above $0.8000.