Forex: AUD/USD: RBA’s Lowe: Threshold for FX intervention ‘fairly high’

on Nov 26, 2013
Updated: Oct 21, 2019
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_iNVEZZ.com: Tuesday, November 26th:_ The AUD/USD yesterday opened at 0.9160 and closed at 0.9194, marking the first day with a gain (0.34 percent) since 19 November. The price initially fell to its lowest point since 6 September, at 0.9119, but subsequently rebounded on the worse than expected October US Pending Home Sales.

Compared with September the indicator fell by 0.6 percent, whereas analysts had expected a rise of 2.0 percent. It was the fifth consecutive decline and the year-on-year reading also dropped, by 1.6 percent.
The Australian dollar gained added traction against its US counterpart following the remarks of Reserve Bank of Australia deputy governor Philip Lowe. He said that the country could no longer depend on rising terms of trade and favourable demographics for advancement and that growth in living standards would be maintained only if Australian businesses increased their productivity. Should that not happen, the ‘lucky country’ would have to adjust to slower growth in profits, asset prices, real wages and government revenues and services.

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Lowe said that productivity could be increased with the changing nature of Australian mining from employment-heavy construction to exports requiring fewer workers.
Lowe also commented on the suggestion by RBA governor Glenn Stevens that the central bank could intervene in the forex markets to address a too-high Australian dollar. Lowe said that he expected further adjustment in the AUD/USD pairing and that the RBA had a ‘fairly high’ threshold for any intervention.

Today’s trading so far has brought the pair to an intraday high at 0.9202 and then to an intraday low at 0.9176, with the 0.9200 psychological level essentially unbreached. At the moment the pair is trading at 0.9187.
In the US today, the Census Bureau is due to release September and October reports on Building Permits and Housing Starts at 13.30 UTC. The S&P/CS Composite-20 House Price Index y/y for September is scheduled to follow at 14.00 UTC.

The CB US Consumer Confidence is due out at 15.00 UTC, along with the Richmond Fed’s Manufacturing Index, both for November.
Today’s resistances: 0.9200, 0.9220 and 0.9240.
Today’s supports: 0.9165, 0.9135 and 0.9100.
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