AUD/USD had already dipped below 0.75 in a Sunday gap but the battle was still raging. Not any more.
This is not low enough for the Reserve Bank of Australia. While they left the rates unchanged at 2%, they kept talking down the A$. The new low is already 0.7433, the lowest since 2009.
Update:Â AUD/USD dips below 0.74 together with the commodity sell-off
Here is the key line. While there are only minor changed to previous statements, it seems that the team led by Glenn Stevens just doesn’t let go. Here is a snippet from the statement:
Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices
In addition, they say that monetary policy needs to be accommodative and that they are still assessing whether this policy is effective. Regarding inflation, they see it as consistent with their target.
But what about housing? The team at Canberra notes the rising home prices in Sydney and see it as more varied in other areas of the Australian continent.
AUD/USD
But it’s also the data that does not appear in the statement that weighs on the Aussie: the Shanghai Composite, China’s main stock index, continues falling. This comes despite efforts from the government to stabilize the situation.
China is Australia’s No. 1 trade partner and the fall in stocks is not on its own. Also commodity prices which Australia exports are on the fall, and this does not bode well for the Aussie, as the RBA noted. Prices of iron ore are in the longest run of losses in 10 months.
Here is how it looks on the chart. We are at levels last seen in May 2009, when the pair began its long recovery from the Global Financial Crisis.
0.75 now turns into resistance, with the round level of 0.74 serving as minor support.
More: AUD and potential fiscal stimulus – Credit Suisse
In our latest podcast we feature a Greferendum preview, NFP review and more
Follow us on Sticher.
