- RBA knocks back AUD with lack of hawkish commentary.
- AUDUSD and EURAUD may see short-term corrections.
- Daily forex economic calendar capped off with "high" US event risk.
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In an otherwise quiet session - one biding time before the fireworks later on this week - the Australian Dollar has taken a small step backwards after the Reserve Bank of Australia's rate decision last night. Attempting to nail down the 'interest rate neutrality' stance, the RBA focused on the external challenges facing the Australian economy to reinforce its accommodative stance: the higher AUD exchange rate and slowing China as reasons not to be too hawkish just yet.
Noticeably, the RBA downplayed the recent period of upbeat data out of Australia (the Citi Economic Surprise Index is at +49.2, just off of its yearly high of +50.6 on March 13 and well-above its yearly low of -19.0 on January 21). The attention paid to the potential for downside rather than the realization of current and building optimism domestically is serving as an attempt to instill a more dovish bias.
As a result, two of our more favored AUD-based crosses, the AUDUSD and EURAUD, have entered clearly definable consolidations/ranges that should see resolution later on this week amid a bout of event risk-driven volatility.
--- Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail email@example.com
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