Forex: AUD/USD caught short post fully priced in RBA cut

FXstreet.com (Barcelona) - As anticipated by the market, which had been pricing in huge odds of an RBA cut today, and unlike the last Nov disappointment when the Australian Central Bank held its fire at 3.25%, today the central bank has acknowledged the need of a 25bp rate cut was imperative to bolster economic activity down under.

Rates were adjusted lower to 3% as the pressures in the economy increase, something that has become quite obvious if one is to take a look at the latest data in growth - tomorrow Q3 GDP expected between 0.1-0.3% -, job creation, inflation well under control, slowdown in the mining investment outlook this year and next, and a meager global perspective.

Did the RBA hint another rate cut in February? Market is currently pricing around 60% chances on this possibility, suggesting the report still shows no change in rhetoric, thus the easing bias moving forward seems the safest assumption. FXWW Founder Sean Lee notes, "you can't tell me that the statement was anything other than 'maintaining easing bias'..."

Some may be surprised to see the Australian Dollar having appreciated on the RBA monetary statement release, however, if we factor in a decision widely discounted, RBA mentioning a brief drive over 3% on headline CPI - due to carbon tax - and short-term speculative positioning being caught overly shorts, the upside knee jerk reaction is far from surprising.

Does the post-RBA price movements clear up the picture? Not a bit. The AUDUSD remains trapped in between very familiar levels, with today's shake-up having achieved none of the technical breakouts some may have hoped for. On the upside, surpassing the 1.0480 to challenge 1.05 and beyond is critical, while bears still face plenty of traffic congestion en route to potential threat of 1.0320/30, strong support through late Oct/Nov.