AUDUSD ended 0.8% up around the 0.6600 cent mark after climbing to an overnight and near 2-week high at 0.66454. After the RBA trimmed its prime Overnight Cash Rate by 0.25% to 0.50%, an all-time low, traders took the Aussie from 0.6530 to 0.6570 on the highly anticipated move. Some had wanted a bigger cut. Australian Prime Minister Scott Morrison announced that he was ready for fiscal measures to counter the COVID-19 risk.
The Fed’s emergency move was the first since 2008 and supplanted the RBA’s 0.25% cut. The differential between US and Australian 10-year yield narrowed to 23 basis points. At the start of 2020, the differential between the 2 key rates was 53 points (USD 1.87%, AUD 1.34%).
The Aussie has faced a grim outlook since the start of the year with the Australian bushfires followed by the coronavirus spread. AUDUSD has been battered as well as the Aussie crosses and the AUDTWI (Trade Weighted Index). US interest rates have further to fall. Short Aussie market positioning will add further fuel for more AUDUSD gains ahead.
Immediate resistance today lies at 0.6640 followed by 0.6680. Immediate support can be found at 0.6570 and 0.6540. Expect consolidation first up with a likely range of 0.6575-0.6645. Prefer to buy dips.