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AUD/USD bid despite an air of caution in RBA minutes

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 16, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    AUD/USD has caught a bid after the release of the RBA minutes.

    AUD/USD has been trying to recover from the downside of the main recovery from below 0.6990 and lows of 0.6983 in the recent sell-off from 0.7115 on the dollar's comeback. The key components of the RBA's rhetoric remain with an optimistic view point, but there are downside risks that Stevens is well aware of and telling markets quite openly that they are only cautiously optimistic.

    China is biggest concern to RBA

    In the minutes, markets were looking for a bearish outlook between the cracks of the optimism and that is what we got today when it was stated that low inflation may offer scope to ease policy and risks remain anchored to China's slowdown as being key in the outlook for terms of trade, commodity prices. AUD/USD however was able to tread on firmer ground, despite cautionary rhetoric, given that, overall, there is no urgency form the RBA to act while the local economy remains on track to grow under current monetary policy and the trade is focused on the now and short term.

    AUD/USD levels

    Technically, should the price continue to the upside, we are looking at 0.7180 and the 0.72 handle (R3), a full cent above the picot of 0.7098. 0.7242 and the 2016 recovery high is the next stop. To the downside, 0.7098 is the pivot ahead of S3 at 0.7066, S2 at 0.7031 and S3 at 0.6999.
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