Governor Stevens Steers Clear Of Dovish Statement, Is Aussie At Risk?
ForexTime | Jul 22, 2014 08:42AM ET
Reserve Bank of Australia (RBA) Governor Stevens surprised last night.
During a public speaking event in support of the Anika Foundation, the RBA Governor refrained from offering a dovish outlook when quizzed about the Australian economy. This was quite the contrary to Stevens’s approach to a previous public speaking event on the 2nd July, when the RBA Governor explicitly stated that investors were underestimating the risk of a significant fall in the Australian currency. As a result of those comments, the Aussie declined by over 160 pips in just under 48 hours. This represented the largest AUD/USD decline since January.
Stevens refraining from using dovish statements last night has left me wondering whether the Aussie could be at risk to their CPI (Inflation) release this evening.
Back in around April time, it could be suggested that the RBA first transitioned towards displaying a more dovish stance on the Australian economy. The Central Bank announced during an RBA Minutes release that the Australian economy was set to enter a period of weaker economic growth, alongside lower inflation levels.
Since then, the RBA have on various occasions tried to entice investors into selling their currency by using a variety of dovish statements. This has included reiterating that the Australian economy is set to enter a period of weaker economic growth and the current Aussie valuation being historically high.
Tonight is the first Australian CPI release since the RBA began using a dovish tone, when speaking about their economy.
If tonight’s Australian CPI release misses expectations, then not only could this be viewed as a reason why Governor Stevens refrained from talking down the Aussie last night, but it would also provide validity to the RBA’s prior warnings and question the Australian economic growth prospects. Furthermore, the AUD/USD would likely become under pressure.
Current AUD/USD support levels are located at 0.9359, 0.9345 and 0.9329. A potential break below the downside of the latter support level would represent the lowest AUD/USD valuation in six weeks.
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