THE TAKEAWAY: RBA keeps rate unchanged at 3.25 percent > Slightly improved economic data and positive trending domestic growth key underlying factor > Aussie trades higher
The Australian Dollar traded higher across the board as the Reserve Bank of Australia kept its key benchmark lending rate unchanged at 3.25 percent citing information on the world economy was “slightly more positive” and domestic growth was running “close to trend” over the past year. Moreover, financial conditions appear strong as policy officials mentioned banks had no difficulty accessing funding. The central bank also said the housing market improved along with rising share prices as evidence underscoring the rate hold.
However, officials noted cause for concern as Asia growth has been “dampened” by European weakness while a domestic return to very strong consumption was seen as unlikely. Interestingly, policy officials voiced little concern over the dismal export data released yesterday that posted the continuation of a 6 month slide throughout its largest trading partners.
It’s unclear whether Forex traders will continue to bid-up the high yielding currency as price action approaches a long-term descending resistance line around 1.0517 area. Conversely, the central bank also said it expects further rate cuts over time which may cause FX traders to unwind their carry positions where price action may find support around the 1.0176 area.
AUD/USD, 1 Minute Chart
AUD/USD, Daily Chart