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Can Central Banks Control The National Currency? AUDUSD Defying RBA – Selling Rallies Suggested - Capital Street FX

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    • Can Central Banks Control The National Currency? AUDUSD Defying RBA – Selling Rallies Suggested
16-Aug
06:45 IST

Reserve Bank of Australia published the minutes from its August Monetary Policy Meeting on Tuesday. The minutes reported the RBA stating that inflation would remain low and the economy could grow faster thanks to lower interest rates. A weakening of the currency as a result of the rate cut to a fresh record low of 1.5% is expected to encourage growth in sectors like tourism and education to offset the winding down of the mining sector.

Regardless of the recent flurry of rate cuts, the AUD is heading in a direction opposite to the one intended by the RBA. As the US still seems uncertain on tightening of rates, and aggressive easing measures from European and Japanese central banks, Australia’s cash rate remains high compared with developed world peers and this is still boosting the Aussie higher.

Since mid-January, the AUDUSD pair has climbed almost 12%. Markets are pricing in a 50% probability of another rate cut by the end of 2016 if AUD continues to hold on to its strength.

Trade suggestion

Sell Limit at 0.77225, Take profit at 0.76910, Stop loss at 0.77345

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