AUD/USD hit new 5 1/2 year low after RBA rate cut

USD/JPY and the JPY crosses traded lower in Asia, initially weighed down by a general lack of demand and soggy Nikkei and, later, on AUD/JPY sales following the RBA’s 25 bp OCR cut. The RBA move was seen aggressive, and resulted in fireworks in an otherwise jaded market. Trading was thin in Tokyo all around. AUD/JPY fell from 91.81 and 91.60 pre-RBA to 89.64 before steadying. USD/JPY was already off from 117.74 to 117.16 in thin trading on Nikkei sogginess and lack of demand post-Tokyo fix. Having then bounced to 117.43, it fell another leg to 116.98 post-RBA. Option-related bids were noted around 117.00 ($848 mln in vanilla expiries). Japanese importers and investors also look to buy dips sub-117.00 as was the case yesterday from 116.64. EUR/JPY fell from 133.43 to 132.57 and GBP/JPY from 176.93 to 175.73. NZD/JPY plunged in sympathy with AUD/JPY from 85.90 to 84.29. Interest in JPY in general looks to be off considerably with many Japanese players preferring to remain sidelined and foreign funds lately more focused on other markets.

EUR/USD opened in Asia at 1.1339 after tracking higher overnight after weaker than expected US data and another round of short covering. Barely moving in Asia, it could only manage a 1.1325-51 range despite the to-do in AUD and JPY markets. EUR/USD could be setting up for a correction higher given the growing view the Fed may either hold off from tightening in ‘15 or just deliver a token hike late in the year. EUR/USD price action over the past four months has been closely correlated with crude oil price moves, and crude has stopped trending down and could be in the process of staging a correction up too.

GBP/USD remained relatively bid between 1.5021-43 before falling back later to 1.5015 on GBP/JPY heaviness. EUR/GBP did little, steady between 0.7540-45.

USD/CHF traded down from 0.9296 to 0.9242 in sympathy with a soggy USD/JPY. EUR/CHF saw a push up to 1.0545 before falling back to 1.0473 in thin and nervous trading.

AUD/USD opened in Asia at 0.7801 and see-sawed between 0.7790-0.7833 into the RBA announcement. The modest short squeeze to the high was unwound into the announcement. Post-announcement saw a plunge to 0.7650 as algos helped mark it lower. RBA’s position that AUD remained overvalued helped push AUD down across the board.

The post AUD/USD hit new 5 1/2 year low after RBA rate cut appeared first on Forex Circles.

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