Australian dollar extends losses after RBA

Commodity currencies are getting hit hard today, especially the antipodeans. The Australian dollar fell over 1% against the US dollar, as recent comments from the RBA weighed on market sentiment. Central bank left interest rates unchanged at the meeting today and purchases of government bonds are set to continue at A$4 billion per week. However, RBA decided to drop the yield control program, citing improvement in the Australian economy and earlier-than-expected progress towards the inflation target. However, RBA governor Philip Lowe said that the Australian central bank is prepared to be patient, and that it would not increase the cash rate until inflation was sustainably within the 2-3% target range, which he stated would likely take some time as wage growth remained materially lower. Meanwhile investors expected a more hawkish stance. Now market attention turns to the Fed on Wednesday and the Bank of England on Thursday. The Fed is expected to announce the start of tapering its bond-buying program. Markets also are pricing an interest rate hike at the Bank of England meeting. If the FED's decision turns out to be more hawkish than expected, it could lead to a further weakening of the Australian dollar.

AUDUSD pair broke below support at 0.7460 which coincides with 38.2% Fibonacci retracement of the last downward wave. If current sentiment prevails, downward move may accelerate towards next support at 0.7340 which is strengthened by 23.6% Fibonacci retracement and 50 SMA (green line). Source: xStation5