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RBA Holds Steady
The Aussie Dollar has come under heavy selling pressure today on the back of the September RBA meeting and yet a further set of weak China data. The RBA held rates unchanged at the meeting overnight, marking the third consecutive time rates have remained at 4.1%. The meeting, which was the last for former governor Lowe, saw the outgoing RBA chief repeating his message of concern over downside economic risks.
Downside Risks for Aussie Economy
While Lowe noted that further tightening might still be necessary, this would depend on incoming data and how risks developed going forward. In terms of those downside risks, the biggest stemmed from household consumption, according to Lowe. With Australian households among the most leveraged in the developed world, tighter financial conditions and higher prices are weighing heavily on consumer spending.
China Concerns Hurting AUD
Further concerns stem from the slowdown in China, Australia’s biggest trading partner. A sharp drop in the Chinese services PMI last night has put fresh focus on those concerns. Despite recent support measures from both the government and the PBoC, concerns around the health of the Chinese economy continue to have a depressing impact on AUD and while this narrative remains in place, AUD looks poised for further weakness near-term.
Technical Views
AUDUSD
The sell-off below the .6520 level has seen the market consolidating recently. However, the retest of that broken support level saw price heavily rejected with the market since turning sharply lower again. With momentum studies weakening the focus is on a test of the .6275 lows next.
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