The AUD/USD dropped to a fresh 6-year low at 0.7425 against the greenback and has posted losses against most other currencies. The losses correlate with recent steep declines in iron ore, copper and other relevant commodity prices. The RBA also refrained from cutting rates, as was generally expected. Governor Stevens once again fell short of delivering an overtly dovish signal in his post-review statement, though he did make the usual boilerplate remark on the AUD, that, further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices.
The Reserve Bank of Australian kept interest rates unchanged at 2%, but used rhetoric to buoy the Australian economy. By attempting to drive down their currency, the RBA is trying to assist their export led economy.
The AUD/USD sliced through trend line support near 0.7532, and is now poised to test the lows last seen in March 2004 at 0.6775. Resistance on the currency pair is seen near former support at 0.7532, and then the 20-day moving average at 0.7675.
Momentum on the currency pair has turned negative as the MACD (moving average convergence divergence) index has generated a sell signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal.