(01 October 2019 ) DAILY MARKET BRIEF 1：AUD tumbles as the RBA eases further
The Australian dollar stood amongst the worst performers on Tuesday morning following the Reserve Bank of Australia’s
decision to cut the cash rate target by 25bps to record low 0.75%. The cut itself wasn’t a surprise as most economists anticipated the move;
however, the language was much more dovish than expected. The Aussie gave up 0.65% against the greenback and fell as $0.6701 during the Asian
session before stabilising around 0.6705. Governor Philip Lowe left the door wide open for further monetary easing if needed. Therefore,
given the deterioration in the job market and the grim growth outlook, the RBA would most likely trim the cash rate down to 0.5% before the end
of the year.
From a technical standpoint, AUD/USD is approaching the key 0.6680 support area that has been tested three times since the beginning of
August. A break of this area to the downside would open the road toward 0.66 (psychological level and bottom of the downtrend channel). Given
the slowdown of the Chinese economy – to which Australia is heavily exposed as roughly 40% of its exports go there - and the ongoing currency
war, we anticipate that more pain is lying ahead for the Aussie..
By Arnaud Masset
