In case you missed the earlier headline:
Well, if they were already considering to pump the brakes on the tightening cycle before all the banking turmoil, then surely now they have the perfect excuse to “wait and see”. That despite the fact that the events in the US and Europe are not expected to have much repercussions on the Australian financial system, at least based on what we have seen so far.
In any case, markets are responding in due kind and OIS pricing now suggests roughly 96% odds that the RBA will indeed pause any rate hikes come 4 April.
I would argue that this is perhaps the reason why the aussie is struggling today, despite the better risk environment. In turn, that has inadvertently dragged the kiwi lower as well. Taking a look at AUD/USD:
The pair has been rubbing against some short-term resistance around 0.6717-24 but looks to be finally coming back down today with a bit more conviction. That said, buyers are still in it for now as they are putting up a defense at the 100-hour moving average (red line) as also seen in trading yesterday.
Hold above that and the near-term bias stays more bullish but break below and the bias turns more neutral instead, with the 200-hour moving average (blue line) seen nearby at 0.6655 currently.
In the bigger picture, the recent lows around 0.6565-80 will be the trigger point for any further downside momentum while the 100 and 200-day moving averages around the region of 0.6761-82 will need to be breached to establish the next potential upside leg.