RBA taper creates turbulence for AUDUSD

As widely expected, at its monthly board meeting this afternoon, the RBA kept monetary policy on hold, including its targets of 10 basis points for the cash rate and the yield on the April 2024 Australian Government bond.


The RBA's forward guidance remained dovish as it reiterated that the conditions needed to raise interest rates (inflation sustainably between the 2 to 3% target rate and wages growth of 3%) are unlikely to be met until 2024 at the earliest. 

Despite a sharp rise in new Covid cases that has seen Melbourne join Sydney in extended lockdowns until vaccination rates have reached higher levels, the RBA elected to taper assets purchases as planned from $5b/week to $4b/week, until at least Mid-February 2022. 

Recent RBA communique had warned of this outcome. A note in the August minutes that fiscal rather than monetary support is more appropriate for this temporary shock and that additional QE would have maximum effect in 2022, with only a marginal impact at this time when additional support is required. 

The RBA said today it would maintain its flexible approach to the rate of bond purchases, and the board will "continue to review the bond purchase program in light of economic conditions and the health situation." 

 The AUDUSD initially rallied 25 pips after the announcement to .7468 before reversing lower, possibly some position squaring following its 5% rally over the past two weeks from the .7106 low.

Near term, the AUDUSD is potentially settling into a new higher trading range with sellers operating ahead of the 200 day moving average .7550/.7600 and dip buyers likely emerging ahead of the .7350/00 support region. 

AUDUSD Daily Chart

Source Tradingview. The figures stated areas of September 7th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

More from AUD


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.