AUD/USD sees two-way traffic for the near term
Used with permission from Bloomberg Finance LP, as of 12 June 2019.
AUD has gone through the risk events of the mid-May general election and the early-June 25bps rate cut by the Reserve Bank of Australia (RBA) – where the cash target rate is now pegged at 1.25% – without a major jolt in volatility.
At best, movements are seen as two-way traffic, albeit with a mild bearish tinge. Momentum gauges such as the average directional index (ADX) are hardly picking up a strong pulse of activity.
The RBA rate cut that brings the benchmark rates to a record low was flagged well ahead, and its impact is diluted. This seems to tailgate the Reserve Bank of New Zealand’s earlier 25bps rate cut in early-May; it forced the RBA to follow suit as central banks globally insulate themselves from the ongoing US-China trade spat.
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