AUD/USD steadies below 0.6200 following a volatile start to the week
- Industrial Production and Retail sales fell sharply in China.
- US Dollar Index stays below 98 following Fed's drastic rate cut.
- RBA will announce new policy measures on Thursday.
The AUD/USD pair started the week with a 50-pip bearish gap and fluctuated sharply during the Asian trading hours after the Federal Reserve announced a 100 basis points cut to its policy rate. After spiking above 0.6300, the pair quickly erased its gains and renewed its lowest level in more than a decade below 0.6100. With markets turning relatively calm ahead of the American session, the pair is trading at 0.6172, down 0.15% on a daily basis.
Will the RBA lower its policy rate?
Following the Fed's announcement, the Reserve Bank of Australia noted that it stands ready to purchase government bonds in the secondary market to help the financial markets continue to operate in an orderly manner. Additionally, the RBA said that it will be announcing further policy measures on Thursday.
According to Westpac analysts, the RBA is likely to lower its policy rate by 25 basis points to 0.25%.
Meanwhile, the data from China showed that Industrial Production contracted by 13.5% on a yearly basis in February and Retail Sales declined by 20.5% in the same period to reflect the impact of the coronavirus outbreak on the economy.
On the other hand, the greenback is struggling to find demand on Monday and keeping the pair's downside limited for the time being. At the moment, the US Dollar Index is down 0.85% on the day at 97.85.
Technical levels to watch for