RBA cut the cash target rate to %0.10 from %0.25 at the November meeting. AUDUSD was moving rather calmly after that. Futures of cash target rate suggest the probability of another cut in December meeting is around 25 percent. RBA also buy 100 billion AUD worth of bonds this month. The governor of RBA Philip Lowe, defend pımping more stimulus at the Australian’s Strategic Forum; “Our action is lowering the cost of government debt, cost of raising bonds in capital markets, but our actions also lowering the cost of someone buying a house for the first time or a business wanting to expand. So collectively our actions are lowering the cost of finance for everybody.” he said and add his words that the government’s increased borrowing is justified because this is a once-in-a-lifetime pandemic and borrowing against future income to support current income is right thing to do.
When studying AUDUSD, looking at S&P 500 might give some hints. One month correlation (22 workdays) between AUDUSD and S&P500 is positive and strong, near %90 and stayed close to this level throughout this year. The final rise of the index may not be fully priced in yet for the AUDUSD yet. You can read our S&P analysis here.
Since September, the price moved a mildly downward trend channel and now it’s testing the upper band. 0.7382 is an important resistance for medium-term direction. Over this level, an uptrend may form.
If this support holds and price reverses to downside, 100 day moving average 0.7161 and lower band 0.6984 can be followed as support levels.
Above 0.7382, the Fibonacci %76.4 level which is at 0.7516 may become a resistance level in the short to medium term. For long term moves, a cup formation may have been forming with a neckline of 0.8136.