This recent surge was quite unexpected as the AUDUSD had been lingering down near 2019 lows looking poised to continue lower below 0.67. It had been well supported by 0.6750 even though it had fallen through this level on three occasions, and yet again in the last few days. Having provided solid support over the last three months, the 0.6850 level would have been expected to offer some resistance and it may still perform this role, if it rallies again.
Towards the end of July, the AUDUSD suffered strong falls which sent it down to its recent trading range around 0.6750. Just prior to this fall, the AUDUSD had surged strongly back up to the key level of 0.7050 as it then looked poised to threaten this level and possibly move higher. Two weeks earlier it tested the level as it reached a seven week high on the back of a steady climb higher over three weeks as it moved from support at 0.6850.
In the middle of June it did drop sharply to its then lowest levels for 2019 pushing through any support around 0.6850 for a short period of time before being bought up again. For the last three months, the AUDUSD seemed content to trade within the range between 0.6850 and 0.7050, before the recent drop lower. Despite several attempts, the AUDUSD has been unable to move back above the 0.7050 level as it is now offering resistance and preventing it from returning to its range above 0.7050.
As a surprise to no one, the Reserve Bank of Australia (RBA) cut its official interest rate another 25 basis points last week down to a historic low of 0.75%, as it fights to head off rising unemployment and stimulate a stalling economy. The latest cut is the central bank’s third rate cut since June and comes after jobs data showed the unemployment rate had risen from 4.9% at the start of the year to now 5.3%. In recent speeches, the RBA governor Philip Lowe has highlighting concerns about unemployment and low wages growth.In a statement immediately after the latest rate cut, Governor Lowe said more work may need to be done to support the economy. "The Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time," Dr Lowe said. Earlier in the year the RBA confirmed it was aiming to push the unemployment rate down to 4.5%. "The Board took the decision to lower interest rates further today to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target," Mr Lowe said.
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