RBA Statement kills the vibe on AUD
07 March 2023
Trading on Tuesday starts with big moves on the Australian Dollar. A few hours ago, we saw a rise of 25bp, which was in line with expectations. The Australian Dollar was weakened, but the rise is not to blame here. We have to look closer at the statement from the RBA, as this is where the cause of the drop is hidden. The RBA Statement suggests that we are getting closer to the end of the tightening cycle and RBA is considering initiating a pause. This caused the AUDUSD to come back to long-term lows around 0.67 and EURAUD to test the long-term high on 1.597. The sentiment for the AUD is definitely negative at the moment.
After the American Session close, there will be an additional speech from the RBA Governor Philip Lowe and, hopefully, we will get some clarification about this dovish statement. We will also hear a few words by Jerome Powell today, who will be testifying before the Senate Banking Committee. At the end of the American session, we will have another prominent central banker speaking - the SNB Chairman Jordan. The CHF is currently one of the strongest currencies; let’s see if this trend continues after the speech.
Moving on to indices. In case of S&P 500, we got a bullish Monday, but the price retraced from the local tops. This allowed it to create a shooting star candle, which can promote a bearish correction on Tuesday. DAX and Dow Jones are looking much better with Dow Jones creating a fourth consecutive bullish candle on the chart. At some point, this can also promote a bearish correction today, a take-profit one.
Commodities had an ambivalent day yesterday. We saw a pretty mild drop in precious metals, as well as a rise in the prices of oil. The situation on oil is especially interesting, as the price has been rising for a few days straight and managed to break key, long-term resistances. Technically, oil is a buy.