AUD: Support Hold Against The USD, Underperforms In The Crosses

The AUD had a range overnight of 0.6392 - 0.6427, Asia is opening around 0.6420. US Stocks look a little overdone in the short-term and retraced overnight. The AUD remained under pressure overnight on the back of a Dovish cut by the RBA and a lowering of their growth and inflation forecasts.

• RBA (MNI): RBA Cuts Cash Rate to 3.85%:  "While the central projection is for growth in household consumption to continue to increase as real incomes rise, recent data suggest that the pick-up will be a little slower than was expected three months ago," the board noted in its statement following the decision.
• RBA (MNI): Board's Dovish Turn Included Debate of 50bp Cut: The Reserve Bank of Australia board considered a 50-basis-point cut to the 4.1% cash rate before unanimously opting for a 25bp reduction, Governor Michele Bullock told reporters Tuesday, warning that a larger move may be warranted in future depending on the impact of global economic uncertainty.
• The AUD/USD continues to see demand under 0.6400, price action against the USD is pretty impressive considering what was thrown at it yesterday. The AUD weakness is being seen more in the crosses.
• Expect buyers to be around on dips while the support in the AUD holds, a close back below 0.6300/50 would start to challenge the newly formed uptrend.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6380(AUD300m), Upcoming Strikes : 0.6375(AUD483.6m May 23), 0.6550(AUD480.3m May 23)
• CFTC Data shows Asset managers have again added to their shorts, while the Leveraged community once again reduced their shorts last week taking them almost back to square now.

• Data/Event: Westpac Leading Index

  Fig 1: AUD/USD spot Daily Chart

  

  Source: MNI - Market News/Bloomberg