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AUD awaits the RBA today

Published March 5, 2019

by Nicholas Cork

AUD appears to be falling into a coma as it awaits real news. The small spike at the open yesterday towards 0.7120 was short lived as it fell back below 0.7100 just as quickly, and then spent the rest of the session within a 20 point range, but still holding above the 0.7070 support level.  Today’s RBA announcement will be widely anticipated as clues in the text are searched for any subtle nuances by the RBA Board, especially as the market is pricing in over 75% chance of a cut by the end of 2019. Prior to this Australia has the Trade Balance release at 11.30 am.

As an apparent US-CHINA Trade resolution approaches, the AUD is seriously lagging if this is a risk-on environment, or even risk neutral. The chart below shows the AUD vs a composite of Asian equity indexes ex-Japan. This index is rallying hard as investors pile back into Asian markets yet the AUD is stuck in a low range – would expect the two to converge again at some stage.

AUDUSD vs Asian stocks ex-Japan    (Reuters)