RBA says easing yes, negative rates no
“The minutes indicated that the central bank continued to have its thumb on the easing button and was prepared to provide additional stimulus if necessary. This is not simply a case of the use of cliché language that we see so often from central banks, as the RBA showed at the November meeting that it meant business when it comes to providing further easing. What was striking in the minutes was the clear manner in which the bank essentially ruled out negative rates, a scenario which had been bandied about by bank members. The minutes stated that taking rates negative was not “sensible” and that further easing would involve bond purchases. This will no doubt be a source of relief to investors with assets in Australian dollars as well as commercial banks, who viewed the possibility of negative rates with apprehension and will be delighted that this idea has been put on the shelf to collect dust.” -Forex crunch-
In these fundamental aspects, Aussie is well supported with double reasons:
- higher interest rate will be kept and it supports the currency value;
- more easing money for the markets to push up the economic situations, will also support the currency value too in this current situation.
At D1 TF Aussie has been trading with a broaden bottom, and the price action is currently trading at the top of that upper range. In that pattern with a strong uptrend move, ideally is then a pullback occurred to the0.7143 price handle and be pushing up from there.
If that scenario would be happened, we are expected for a strong break up to reach more higher destination at 0.7650x at least in the coming weeks.
At lower TF H1, the short term trading strategy is to keep watching for the pullback to the support range from 0.7302 to 0.7325, from there a buy can be executed, if the price action makes no further lower lows, but higher lows.
We will keep monitoring that trade in the coming posts.