19 Sep 2013
QE shocker and what it means for the Aussie/RBA
FXstreet.com (Barcelona) - The Federal Reserve announced it will maintain its $85 billion/month QE program, with Ben Bernanke striking a dovish tone thorough his press conferences, while expressing renewed concerns in the economy, which he anticipates may face pressure after the rise in bond yields. The market was caught off guard as a $10b taper had been priced in.
Central banks all over the world will certainly be very discontent on Bernanke's decision, however, one has been particularly vocal on verbal intervention towards any strong appreciation in its local currency, that is, the RBA.
According to Milan Cutkovic from FXWW: "This is game-changing for the other central banks; the RBA has been using verbal intervention quite often in the past few months, but this could prove now less effective, making further rate cuts more likely."
Cutkovic also touches on the RBNZ, noting "the central bank will have an even more difficult task fighting a higher Kiwi and the domestic housing market is making a rate cut unlikely."
With the AUD/USD last quoted marginally above 0.95, market participants should now be on high alert for any renewed dovish signs by the RBA. From a technical standpoint though, if more gains are scored, which seems likely, the next upside target for the Aussie seems to be at 0.9550 - swing high June 20 - ahead of 0.9630/50 - swing high June 14 -.
Central banks all over the world will certainly be very discontent on Bernanke's decision, however, one has been particularly vocal on verbal intervention towards any strong appreciation in its local currency, that is, the RBA.
According to Milan Cutkovic from FXWW: "This is game-changing for the other central banks; the RBA has been using verbal intervention quite often in the past few months, but this could prove now less effective, making further rate cuts more likely."
Cutkovic also touches on the RBNZ, noting "the central bank will have an even more difficult task fighting a higher Kiwi and the domestic housing market is making a rate cut unlikely."
With the AUD/USD last quoted marginally above 0.95, market participants should now be on high alert for any renewed dovish signs by the RBA. From a technical standpoint though, if more gains are scored, which seems likely, the next upside target for the Aussie seems to be at 0.9550 - swing high June 20 - ahead of 0.9630/50 - swing high June 14 -.