Aussie Spikes Up After RBA’s Interest Rate Decision, Nov 03, 2020

RBA Slashed Interest Rate to Record Low

Today RBA released interest rate decision and as expected cut the interest rate to 0.10 pct against 0.25 pct previous one. According to RBA Governor, recent economic data have been better than expected and the near-term outlook was better than it was three months ago. Moreover, the recovery is still expected to be bumpy and drawn out and the outlook remains dependent on successful containment of the virus only.

Key Elements declared by RBA are as follows:

• a reduction in the cash rate target to 0.1 per cent
• a reduction in the target for the yield on the 3-year Australian Government bond to around 0.1 per cent
• a reduction in the interest rate on new drawings under the Term Funding Facility to 0.1 per cent
• a reduction in the interest rate on Exchange Settlement balances to zero
• the purchase of $100 billion of government bonds of maturities of around 5 to 10 years over the next six months
• RBA expects the economy will grow by 6% in the current fiscal year through June 2021 and 4% in the following year
• RBA has forecast that Australia’s jobless rate will peak at less than 8%, down from a previous estimate of 10%
• Inflation is expected to be 1% in 2021 and 1.5% in 2022
• RBA would not lift its benchmark cash interest rate until inflation reached its target band of between 2% and 3%

Technical Analysis:

AUDUSD: The Aussie remained volatile after RBA’s cash rate decision and reverses previous loss of early Asian hours too. The pair made intraday high at $0.7094 and low at $0.7028 marks. On the top side key resistances are seen at $0.7090, $0.7122, $0.7170, $0.7190, $0.7222, $0.7240 and $0.7290 mark respectively. On the other hand, a consistent close below $0.7026 will take the parity down towards key supports around $0.7002, $0.6969, $0.6922, $0.6861, $0.6833 and $0.6799 mark respectively.

Take a look and do trade wisely!
Good Luck