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FxWirePro: Aussie declines on RBA rate cut outlook; likely to decline another 300 pips
In his speech today, Reserve Bank of Australia (RBA) governor Phillip Lowe deviated from the central bank’s neutral stance and indicated that the central bank is currently in a watch out mode with a dovish bias. Here is the full speech of Governor Lowe, https://www.rba.gov.au/speeches/2019/sp-gov-2019-05-21.html
And here is the part that suggests that rate cuts are on their way, “The Reserve Bank Board recognises that monetary policy has a role to play here. Earlier today, we released the minutes of the Board's meeting two weeks ago. At that meeting, we discussed a scenario in which there was no further improvement in the labour market and the unemployment rate remained around the 5 per cent mark. In this scenario, we judged that inflation was likely to remain low relative to the target and that a decrease in the cash rate would likely be appropriate. A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment, at our meeting in two weeks' time, we will consider the case for lower interest rates.”
The Australian dollar is currently in a sell trend. An entry around 0.69 area would have been a much better entry rather than the current price of 0.688. However, our calculations at FxWirePro suggests that AUD/USD would move lower as June 4th approaches. The target is around 0.657 area. Formidable support is around 0.675 area.
Aussie dollar is down 0.7 percent today on dovish governor Lowe.