RBA Rate Cut Boosts Australian Dollar As Oil Price Unable to Sustain Canadian Dollar


Markets are significantly recovering today after a strong US close the day before. The Canadian dollar has made a reversal, unsupported by oil prices. The Australian dollar is generally up today following the news of the RBA rate cut. However, the downside is relatively limited, save for a few.

The dollar became mixed, along with the yen and major European currencies. The Swiss franc appears to have continued its recent bullish momentum against the euro and has strengthened overall. In general, markets are indeed heterogeneous, with the focus on the outcome of the US elections.

As expected, at today’s meeting the RBA announced further easing of the monetary policy. The RBA cut its interest rate to 0.1% from 0.25% earlier. Likewise, the target for the yield on 3-year government bonds and the interest rate on new funds raised under the urgent financing facility was also reduced to 0.1%.

Meanwhile, the central bank also lowered the interest rate on settlement balances (the Australian equivalent of US interest rates on excess reserves) to 0. When buying assets, the RBA announced the purchase of AUS$100 billion in government bonds with maturities from 5 to 10 years old. Over the next 6 months, and then analyze the need for additional purchases “in light of the changing outlook for jobs and inflation”.

In terms of monetary policy outlooks, the central bank reiterated the directive that “the board does not expect a cash rate hike for at least three years.” Policymakers also suggested that the size of the quantitative easing program is under consideration and depends on the prospects for employment and inflation. They also pledged to “do more if needed.”

Since the RBA has ruled out negative interest rates, we expect it to do so through a rate cut this month. While policy rates at current levels will remain unchanged in the coming years, the central bank will focus on scaling up quantitative easing in case additional easing is needed in the future.
AUD/CAD Recovers As AUD/NZD Steady After RBA Cut
The Aussie is broadly trading higher following the RBA’s release of the rate cut, including against other commodity currencies. The rebound in AUD/CAD is one of the most obvious. The rebound from 0.9297 is slightly stronger than expected.

However, the cross is comfortably holding beyond the upward moving averages, which maintains short-term forecasts for the upsurge. The corrective fall from 0.9696 should resume sooner or later, as long as the 0.9433 resistance is held. A break of 0.9247 will target a 38.2% recovery from 0.8066 to 0.9696 at 0.9073.

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$200 Min Deposit
  • Award-winning Cryptocurrency trading platform
  • 14 Cryptoassets available to invest in
  • FCA & Cysec regulated
$200 Min Deposit

Highly volatile unregulated investment products. No EU investor protection.

  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$100 Min Deposit
  • Trade top Cryptos such as Bitcoin, Litecoin and Ethereum plus more
  • Zero commissions and no bank fees on transactions
  • Around the clock service with support in 14 languages
$100 Min Deposit
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
Share with other traders!

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.