Reserve Bank of Australia Dampens Momentum in Aussie
The Australian dollar, or Aussie, has been on a good run over the last couple of weeks. The Aussie's been climbing higher thanks to the rallies in metals and in anticipation of today's Reserve Bank of Australia (RBA) meeting.
A couple of month's ago, the RBA was talking pretty tough on inflation and was expected to hike rates later this year. (Benchmark interest rates in Australia are already quite high at 7.25%.) But the RBA squashed the notion of hiking interest rates anytime soon. You can read a full review of the RBA's announcement via Bloomberg:
Australian Dollar Falls After RBA Meeting
I wouldn't be surprised to see the AUD/USD pullback even further after today's RBA guidance. The pair rolled over from horizontal resistance at 0.9640 yesterday and then broke below its short-term support line today.
The point and figure chart won't come into play unless the AUD/USD drops down to 0.9300, which would put the pair on a sell signal. I don't think that will happen over the next month or two because metals prices, especially gold, are too strong.
In fact, if metals prices keep going the way they are, then I would be inclined to look to buy the AUD/USD in a couple of weeks and position for a run to parity (1.0000).
AUD/USD (Aussie) Daily Chart
Eric
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