The Australian dollar found support earlier today and rose near the $0.663 area against the greenback, following the Reserve Bank of Australia’s policy decision, as the bank chose to prolong its pause at the 3.6% level.
The central bank, as widely expected, opted to keep its cash rate unchanged for the third consecutive meeting, since policymakers continue to assess that inflationary pressures will persist in the foreseeable future given the current economic backdrop. Even though inflation has eased notably from its 2022 peak, the recent flare up forced the committee to adopt a cautious stance and reiterated their bias for data dependency for more accurate policy adjustments.
Labour market growth has moderated in recent months, unemployment is edging higher and firms are facing hiring difficulties as the candidacy weakens. The central bank however sees the labour market as “tight” for the time being which is what allows policymakers to stand in the sidelines and monitor economic developments before deciding how to act next.
Governor Michele Bullock in the press conference post the decision, stated that the central bank is more inclined to keep rates on hold or potentially raise them next year”, adopting a hawkish stance and dampened bullish sentiment around Australian equities. The ASX fell by almost half of a percent at market close, post the hawkish remarks.
Technical Analysis
AUDUSD Chart – The Aussie makes headway against the greenback after RBA’s hawkish pause
Resistance: 0.6685 (R1), 0.6750 (R2), 0.6800 (R3)
Support: 0.6585 (S1), 0.6520 (S2), 0.6440 (S3)