FX News - Mar 4 2014: RBA Maintains Rate at 2.5%

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Talk about the aussie’s ‘historically high’ value returned to the Reserve Bank of Australia’s (RBA) statement earlier today after not being mentioned for the past several months. The statement was given by RBA Governor Glenn Stevens who also mentioned that the Bank would maintain rates at 2.5%. The mention about the aussie was largely due to the AUD/USD pair’s return to the 0.9000 over the past few weeks. As expected, the market reacted negatively to the statement, which sent the pair plummeting almost immediately.

The AUD/USD pair went to a low of 0.8909 during today’s trading, but was able to recover the day progressed, as it peaked to a high of 0.8965. It is currently trading at 0.8950, with initial resistance seen at 0.8966, followed by 0.8988. Meanwhile, initial support is at 0.8909, followed by 0.8887.

Prior to Australia’s monetary policy statement, the country also released its building permits data for January and Q4 current account balance. Building permits came out higher than expected, with a 34.6% growth (versus 24.0% expected) over the past 12 months, and a 6.8% growth (versus 2.0% expected) compared to the previous month. The current account balance was disappointing, however, as it came out at -10.1 billion versus the -10.0 billion expected.

As for the EUR/USD pair, it was able to recover during today’s European session after lingering under the 1.3740 area due to European Central Bank President Mario Draghi’s dovish statement yesterday. However, the pair is currently showing signs of strength particularly after Russian President Vladimir Putin ordered his troops in Crimea to return back to base, slightly easing tensions in the region.

Expect further volatility from the pair, though, as the week progresses. There’s the GDP data for Q4 from Europe, then on Friday will be the release of the US NFP data. The pair is currently trading at 1.3754, with initial resistance seen at 1.3762, followed by 1.3796. Meanwhile, initial support is at 1.3694, followed by 1.3660.

By FX Strategy Team, Published on 4th of March 2014
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