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RBA Holds Rates Steady at 2.5%, AUDUSD Little-Changed

By David Maycotte
06 May 2014 05:25 GMT

Talking Points:

  • RBA Keeps Headline Rate Unchanged at 2.50 Percent
  • Australian Dollar Rises versus US Dollar Following Data Release
  • Neutral Monetary Policy Tone

The Reserve Bank of Australia (RBA) kept its headline rate unchanged at 2.50 percent, and the policy statement accompanying the interest rate decision exuded a broadly upbeat tone.

“At the December and February meetings, the Board judged that, given the substantial degree of policy stimulus that had been imparted and evidence of its effects, it was prudent to hold the cash rate steady,” said the RBA in its monetary policy statement released earlier today, “market pricing suggests no change to the cash rate is expected for about a year.”

The RBA says the risks surrounding the forecasts for the global economy appear broadly balanced, and amidst China’s economic slowdown growth forecast remains broadly in-line.

“Over the past few months, there have been further signs that very stimulatory monetary policy is working to support economic activity,” said the RBA, “nevertheless, it is likely that the unemployment rate will continue to edge higher for a few quarters, and turn down only after growth rises to an above-trend pace.” Inflation is expected to remain consistent with the target.

The AUDUSD spiked higher before returning to familiar overnight ranges. DailyFX Strategist Ilya Spivak sees support at 0.9266 (trendline), and resistance at a 0.9325 (a Fibonacci retracement level). He says that prices are too close to relevant support and resistance levels to justify a trade and remains flat.

RBA Holds Rates Steady at 2.5%, AUDUSD Little-Changed

AUD/USD 5-minute – using FXCM Marketscope 2.0.

-- Written by David Maycotte, DailyFX Research Team. Questions, comments or concerns can be sent to dmaycotte@FXCM.com.

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06 May 2014 05:25 GMT