Forex Flash: RBA to pause easing cycle; AUD/USD 1.0490 range top vulnerable - NAB

FXstreet.com (Barcelona) - The recent Australia Dollar strength post-RBA rate cut has been attributed to specs positioning being caught overly bearish on the pair, a 'buy the fact' case after the interest reduction had been fully disccounted ahead of the event or even other market commentators hinting that the RBA statement sounded less dovish-than-expected...

According to NAB strategists, the AUD performance "is attributed both to a 'buy the fact' response to a rate cut that was almost fully discounted prior to the event, and the lack of any overt guidance from the Reserve Bank statement that an easing bias remains in place." However, in words of NAB, "if the market really believed that the RBA was done, the AUD would probably have broken up above 1.0490 range high, and markets would not continue to price another 50bp of easing in this cycle."

The suggestion many, including NAB, took from the statement, "is that a pause in the easing cycle is now due and enough to justify the AUD holding firm." The Australian-based institution suspects that "the top side of the 1.0288-1.0490 range that has held since the beginning of November continues to look by far the more vulnerable."