AUD / USD rallied after the Reserve Bank of Australia (RBA) meeting. The price is struggling around 0.7400. Société Générale economists have low conviction of a sustained rally to 0.75 without a stabilization of China’s equity markets and in metals.
Key statements:
“The RBA surprisingly decided to maintain its plan to reduce AGB purchases from early September. The bank will keep the program under review in light of economic conditions and the health situation. In the statement, it acknowledged the strong economic recovery and expects growth to recover quickly from a potential contraction in the third quarter once the latest outbreaks of the virus are contained. “
“AUD bears are unlikely to throw in the towel quickly. AUD relief is likely to be short-lived until nervousness in Chinese equity markets settles. Tactically, we believe that the AUD / USD remains a sell before it rises unless the pair can break above 0.7450.”
“The continued rebound is likely to persist towards the daily kijun line at 0.7450, which is also the 23.6% retracement of February’s decline. This is the first layer of resistance. If the pair is able to overcome this hurdle, the rebound it could extend towards the July peak of 0.7580 / 0.7600. “
“Defending 0.7300 will be crucial to avoid the next stage of the bearish move.”
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