News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • The price of oil appears to be on track to test the yearly high ($76.98) after breaking out of the descending channel from earlier this year. Get your #crudeoil market update from @DavidJSong here:https://t.co/QrzTFOCiw5 https://t.co/DQ0r1OsKF1
  • I read this morning that Boston Fed President Eric Rosengren is retiring 9 months earlier than his term expiration due to health issues. Hope he recovers quickly. Could change the calculus for the Fed's policy position next year as he was an incoming hawkish voter. #Tapering https://t.co/WDUeZl3Ziy
  • PRESIDENT BIDEN WILL GET COVID19 BOOSTER SHOT THIS AFTERNOON $PFE $MRNA
  • The next 24 hours is going to be interesting for monetary and fiscal policy insight - particularly in the US. Keeping tabs on the Dollar and $SPX https://t.co/K50JIHYPVd
  • BoE Governor Bailey says the rate of recovery has slowed over recent months and that slowing is continuing - Most MPC members view that outlook for the labour market as highly uncertain and to some degree likely to be resolved in fairly short order $GBP
  • The week starts off with elevated expectations for seasonal volatility, central bank speculation and critical political uncertainties. DailyFX's @JohnKicklighter highlights the dominating themes in the markets this week👇 https://t.co/h6xR9DUGge
  • Heads Up:🇬🇧 BoE Gov Bailey Speech due at 15:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-27
  • Tech stocks not having a good day, but cyclicals are on fire. Energy and financials sharply higher, materials also in positive territory. $ARKK about to break a double top pattern support #trading $XLE $XOP $XLF $XLB
  • Treasury bond yields extending their push higher across the curve. Ten-year just pierced 1.50%, five-year trading at its steepest level since Feb 2020. This brings the Nasdaq 100 to Russell 2000 ratio into focus with growth underperforming value amid rising rates. $NDX $RUT $TNX https://t.co/hZvP7wQE4E
  • $USDMXN gains ground at the start of the week, bolstered by higher US Treasury rates. For reference, the US10 yield briefly climbed to 1.51% this morning, its highest level since late June #trading #TRMX
Australian Dollar Whipsaws After RBA Policy Announcement

Australian Dollar Whipsaws After RBA Policy Announcement

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Australian Dollar spikes down, then recovers on RBA rate decision
  • Initial weakness likely reflects forceful rhetoric about appreciation
  • Subsequent recovery speaks to AUD’s lasting yield-seeking appeal

The Australian Dollar spiked briefly lower after the RBA dialed up rhetoric aimed at talking down the currency in the statement accompanying today’s monetary policy announcement. Governor Philip Lowe said that recent appreciation will “contribute to subdued price pressures”. He added that further gains “would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.”

The move lower would prove short-lived, with the Aussie swiftly recovering to trade at levels prevailing before the announcement crossed the wires. While the central bank is in no hurry to hike rates – arguing that wage growth will remain subdued for some time while supervisory measures meant to cap household debt and cool the housing market are proving to be effective – it is likewise averse to cutting them.

The resulting standstill makes the Aussie appear attractive for yield-seeking investors in an environment where most G10 central banks have a very long way to go to erode the currency’s rate advantage. Indeed, the US Dollar had been the only currency aiming to close the gap between its baseline lending rate and that of the Australian unit, but recent skepticism about the Fed’s hawkish credentials have put that in doubt.

Retail traders expect Aussie Dollar weakness. Find out here what this hints actual price trends!

AUD/USD vs. Australia-US 10-year bond yield spread (15min chart)

Australian Dollar Whipsaws After RBA Policy Announcement

Chart created with TradingView

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To receive Ilya's analysis directly via email, please SIGN UP HERE

Contact and follow Ilya on Twitter: @IlyaSpivak

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES