Chart of the day: AUDUSD (10.12.2024)

The Central Bank of Australia (RBA) decided to keep interest rates unchanged at 4.35%, in line with market expectations. However, the statement softened the Bank's previously hawkish stance. The report may say that the bank is gaining confidence that inflationary pressures are declining in line with recent forecasts, and the statement removed the “excluding nothing” statement - which signals that many of the uncertainty factors that the RBA had previously perceived have disappeared.

RBA Bullock's comments, however, proved a bit more hawkish. The banker commented that some of the data was a bit weaker than expected, giving the board some confidence that inflationary pressures are abating, but looking in vain for a definitive victory over inflation. Bullock maintains that core inflation remains too high, but at the same time, when asked about rate cuts in the near term, she did not outright reject the idea. Investors are now pricing in a ~56% chance of a 25 basis point rate cut next February. 

It was the increase in the chances of faster rate cuts in Australia that caused the AUDUSD pair to record sizable declines today. 

The AUDUSD pair is trading near 0.75% declines today, which takes the stock down to near the lowest levels seen since August and April of this year. It is worth noting that in the past there was an activation of the demand side in these areas, which supported AUD in the medium term. Now, however, the structure of the declines looks a bit different, the length of the downtrend is longer, which may mean that supply in this case has the market advantage. Regardless of the market outlook, however, it seems that the reaction to the early support zones currently being tested could provide an important indication of the pair's overall trend and possible further movements.  Source: xStation