Aussie extends advance after RBA governor diminished prospects for rate cut
The Australian dollar hit one-month high at 0.6842 on Friday, in extension of Thursday’s 1% rally, with fresh advance being sparked by more hawkish than expected remarks from RBA’s governor Lowe.
Lowe said that implementation of negative interest rates in order to meet Australia’s inflation and growth targets is very unlikely.
He added that low interest rates alone wouldn’t be able to stimulate investment, pointing on some non-monetary actions that would help.
Fall in Australian unemployment also added to reduced risk of rate cut.
Thursday’s rally marked the biggest one-day gains since 18 July and generated bullish signals on penetration of thick daily cloud (spanned between 0.6791 and 0.6879) and daily close above pivotal Fibo barrier at 0.6809 (61.8% retracement of 0.6894/0.6670 bear-leg).
Daily studies maintain strong bullish momentum and MA’s (5/10/20/30/55) in bullish setup created multiple bull-crosses, underpinning the action.
Extended weakness of the US dollar contributes to Aussie’s advance, which today cracked Fibo barrier at 0.6841 (76.4%) and may extend towards next strong barriers at 0.6858 (100DMA) and 0.6879 (daily cloud top).
Broken former strong barrier at 0.6800 zone now offers solid support which is expected to keep the downside protected and maintain bullish bias.
Res: 0.6841; 0.6858; 0.6879; 0.6894
Sup: 0.6820; 0.6800; 0.6787; 0.6777