AUD/USD challenges the 100-hour moving average once again
The aussie gained slightly on the back of remarks from RBA governor Lowe that they are unlikely to get to a point where QE is needed.
The fact that Lowe also continued to brush aside talk of negative rates goes to show that perhaps they aren't really keen to pursue unconventional monetary policy.
And that is helping to give the aussie a minor reprieve but really, we are still some way off before seriously discussing and debating this issue.
AUD/USD rose to a session high of 0.6795 and is now challenging the 100-hour MA (red line) @ 0.6791 with the 200-hour MA (blue line) providing an added line of defense for sellers @ 0.6799 - just sitting nearby.
But perhaps it is more important to take a look at the context of the situation.
Lowe made a mention that it will need the cash rate to reach 0.25% before the central bank even considers QE. That is two 25 bps rate cuts away from where we are now.
Now, cash rate futures are essentially only pricing in one rate cut for 2020. That means we aren't exactly close to reaching that threshold just yet.
However, if economic conditions continue to take a turn for the worse, expect any future rate cut expectations/pricing to also involve the possibility of QE and that is a bit of a double-edged sword for the aussie when you consider the outlook for next year.
All that said, I still reckon we are a long way from even seriously weighing the need for unconventional monetary policy in the land down under. The only good thing going for the RBA right now is that they have the gift of time.
Let's see if and how they can use that to their advantage.
