Reserve Bank of Australia's Dovish Statement Weighs on Australian Dollar
20 June 2023
As anticipated, Monday unfolded without any significant market shifts or volatility. The overall sentiment remained largely unchanged. Today's calendar also mirrored yesterday's calm, with the primary event being the release of minutes from the Reserve Bank of Australia's monetary policy meeting. Notably, officials expressed that the debate between a rate hike and maintaining current rates is finely balanced. This statement, perceived as somewhat dovish, led to a decrease in the Australian dollar's value.
This drop is evident when looking at the AUDUSD pair, which is experiencing significant losses following a strong performance in the first half of June. At present, the pair is nearing a key horizontal support level at 0.678. Despite this downturn, the long-term sentiment for the Australian dollar to American dollar remains bullish.
Turning to indices, the bearish correction continued, with the market opening on a low note today, potentially resulting in a third consecutive bearish candle. This is especially noticeable on the French CAC 40, which bounced off a critical horizontal resistance level at 7350. As long as we remain below this level, the mid-term sentiment leans towards bearish.
Apart from these developments, many instruments are experiencing a rather sideways movement. We are still awaiting more significant movements. As predicted, volatility was subdued yesterday, and no major shifts occurred.