AUD/USD remains above Ichimoku cloud after RBA interest rate decision

AUD/USD remains above Ichimoku cloud after RBA interest rate decision
Written by:
Crispus Nyaga
6th October, 04:10
Updated: 6th October, 04:11
  • The AUD/USD continued to rise as investors reacted to the latest RBA interest rate decision.
  • The bank left interest rate and its yield curve control policies unchanged.
  • Earlier on, data showed that Australia's trade surplus declined from A$4 billion to $2 billion in August.

The AUD/USD pair is little changed today as traders reflect on the RBA interest rate decision and the Australian trade data. It is trading at 0.7190, which is higher than yesterday’s high of 0.7150.

AUD/USD
AUD/USD rises after RBA decision

RBA interest rate decision

The Reserve Bank of Australia (RBA) concluded its monetary policy meeting today and decided to leave interest rates unchanged at 0.25%. The bank also left the yield on the 3-year Australian Government bonds unchanged.

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In the statement, Governor Philip Lowe said that Australian economy is making steady recovery, aided by banks policies. However, he remained concerned about Victoria, where a second-wave of the virus has affected the growth. He also warned that the overall recovery would be bumpy and uneven. He said:

“Labour market conditions have improved somewhat over the past few months and the unemployment rate is likely to peak at a lower rate than earlier expected. Even so, unemployment and underemployment are likely to remain high for an extended period.”

The Australian economy has been affected greatly by the pandemic. More than 21,000 people have been infected while more than 800 have died. Consequently, the situation has pushed the country into its first recession in decades. Still, the 7% contraction in the second quarter was better than most countries like the United States and Germany.

In recent months, most central banks have left interest rates unchanged. In the United States and Europe, the Fed and the ECB have not tweaked rates for months. The Fed has also changed its inflation policy, meaning that it will not raise rates for years. The ECB is also considering doing the same.

Earlier on, the AUD/USD reacted to the country’s trade numbers. According to the Australia’s Bureau of Statistics, the country’s exports declined by 4% to A$32.63 billion while imports rose by 2% to A$29.9 billion. As a result, the total trade surplus declined from A$4.6 billion to A$2 billion.

The bureau said that the country’s liquified natural gas (LNG) exports fell to a three-year low while iron ore and coal rebounded. Its total trade with China, its biggest trading partner, was flat at A$13.83 billion.

AUD/USD technical outlook

AUD/USD
AUD/USD technical chart

The four-hour chart shows that the AUD/USD pair has been in a relatively strong upward trend since September 25, when it reached a low of 0.7000. Today, it reached a high of 0.7208, which is along the upper side of the Donchian channel. Also, the price has moved above the Ichimoku cloud and is at its highest level this month. Therefore, I suspect that the pair will continue rising as bulls aim for the next resistance at 0.7250.

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