The Australian Dollar goes for a Ride on Data and the RBA

This morning, the Reserve Bank of Australia (RBA) kept its monetary policy as is and its cash rate at a record low of 1.50 percent. Before the central bank, there was key trade balance data crossing the wires which caused the AUD/USD to spike higher. However, after the RBA rate decision and accompanying statement, the Australian Dollar gapped sharply lower, as seen on the below MT 4 chart.

Trade data showed that there was a five percent decrease in imports and a one percent increase in exports from January. Australia’s trade surplus increased to A$3.57 billion from January’s A$1.5 billion. This is the fourth straight month in which exports have outperformed imports.

Exports of agricultural products fell a bit in February by A$915 million. Goods and services rose by A$1,572 and A$76 million, respectively. Commodities like iron ore, coal and copper were little changed from the previous month. Exports to China rose by A$100 million and fell A$3 million with Japan.

aud/usd chart

The Australian Central Bank Stays the Course

This morning, the really big news came out of the Australian Central Bank. The RBA left its short term cash rate at a record low 1.5 percent, as was expected. The big statements followed in their post policy statement.

The central bank said that home lending growth was still outpacing income growth. Commercial banks need to ensure that their lending metrics are appropriate. They also said that headline inflation would pick up to above two percent this year. However, the RBA once again cautioned that a strong AUD would complicate economic adjustment. They still left monetary policy unchanged consistent with sustainable economic growth.

David Frank

David Frank

Chief Market Strategist at CupO'Forex
David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.
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