Date: 21 May 2019
The Australian Dollar gave back early week gains against a basket of top-tier currencies earlier today, following a key speech from Reserve Bank of Australia Governor Phillip Lowe and the release of the highly anticipated meeting minutes from the latest monetary policy meeting from the Reserve Bank of Australia.
Traders increased bets that central bank would cut interest rates this June after Reserve Bank of Australia Governor Lowe finally admitted that the RBA is now considering cutting rates in June. The Reserve Bank of Australia meeting minutes also offered similar bearish commentary, with policymakers noting that an interest rate would cut would be deemed appropriate if the Australian labour market fails to improve.
Yesterday, the Australian Dollar moved sharply higher across the board after Prime Minister Scott Morrison managed to cling to power after a closely fought general election victory over the weekend. The Australian Dollar traded back above 0.6900 level against the U.S Dollar following the announcement of the result, after previously falling to a new 2019 trading low during the build-up to the election.
Most analysts had expected that Prime Minister Scott Morrison would be ousted by the rival Labour Party over the weekend, which partly-attributed to the bearish sentiment surrounding the Australian Dollar as the Labour Party were seen to be less business friendly and able to manage Australia’s struggling economy going forward.
The Australian Dollar has been one of the weakest performing G10 currencies so far this month, with Australian Dollar falling to its weakest level against the Japanese yen since December last year. The Australian Dollar has been a major casualty of the ongoing trade war between its two largest trading partners, China and the United States.
AUD/USD Daily Mountain Chart | Source: ActivTrader
The AUD/USD pair remains technically weak while trading below the 0.6988 level, which is an important technical level to watch this week and now becomes former key support turned resistance. Major downside support for the AUD/USD pair is currently located at the 0.6865 level with extended weekly support located at the 0.6750 level.
Written by Nathan Batchelor, External Analyst, ActivTrades
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