RBA’s statement has made it clear that they are ready to continue their easing cycle if the COVID-19 situation does not improve. Short AUD/JPY?
- RBA slashed rates earlier this morning from 0.75% to a historical low of 0.50%.
- They mentioned that the COVID-19 outbreak has a significant effect on the Australian economy and according to the Organisation for Economic Cooperation and Development (OECD), it could wipe at least 0.5% from Australia’s economic growth this year.
- The move to cut rates further was to support an already weak Australian economy amid a housing downturn.
- Governor Lowe concluded in his statements that RBA is ready to ease further if the situation continues to worsen.
- However, Lowe remained optimistic that the Australian economy could rebound once the outbreak is under control.
- In our opinion, we feel that the spread of the outbreak has just started in Europe and more new cases are reported in the US every day.
- Having said that, we feel that RBA may ease further by cutting rates further to 0.25% in the upcoming meeting even if fiscal support is provided.
- AUD/JPY could fall lower towards 69.40 after price broke a critical uptrend support.
Fullerton Markets Research Team
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