Glenn Stevens Leaves Governorship


Well, it just so happened that there is an RBA rate decision AND a Socceroos world cup qualifier on the same Tuesday. Sure, we’re probably up for disappointment when it comes to the football, but what about the RBA?

AUD Cash Rate: On hold at 1.50% expected.

This would be the meeting to close the curtain on Glenn Stevens’ governorship. Following last month’s rate cut, there most likely wont be any bells or whistles today as he slips out the back door.

Whether by good luck or good management, Stevens has not overseen a single recession for the Australian economy during his time at the top of the RBA, and whether you agree with how his board has handled things, this is most certainly nothing to scoff at. Thank you and well done.

With no movement in rates expected today, all eyes will turn to the accompanying monetary policy statement for clues on forward guidance. Will we see an implicit easing bias tagged onto the end of the statement? What will the comment on the all important inflation outlook be? Has recent economic data kept the board happy? All questions that will have the capacity to move a relatively non-expectant market.

Lets take a look at the charts to see the state of play for traders heading into the release:

AUD/USD daily

AUD/USD daily

The daily chart looks a little messy because of that huge weekly support line that dissects straight through the middle of our screens, but for me that’s the most important part of the higher time frame charts.

We’re in a long-term bullish trend and in the grand scheme of things, still close to support.

AUD/USD 4 hours

AUD/USD 4 hours

The 4 hourly chart then shows today’s intra-day level that you can look to manage some risk around heading into this afternoon’s decision if you’re looking at playing from the long side.


I know today’s focus is all about the RBA, but I couldn’t let this cracker of a speech by Kuroda go unnoticed. Here are some key quotes:

“It is often argued that there is a limit to monetary easing but I do not share such a view.”

I read this and I just shake my head. Talk about putting your head in the sand and hoping things just work out.

I guess Kuroda has come this far, what other choice does he really have?

Anyway, this ultimately opens the door to further easing into negative territory when the BoJ next meet in September. Very bearish JPY / bullish USD/JPY.

“The Bank has a broad range of policy options. It will continue to choose the most appropriate policy actions among those options, depending on the situation for economic activity, prices and financial conditions.”

Not only a further reduction into negative territory for rates, but obviously opening the market up to the more that’s going to come in the form of buying government or corporate bonds.

But we do remember Draghi’s ‘doing whatever it takes’ speech, right? The GIF on that past blog post sums up how Euro shorts on that one ended up…

USD/JPY daily

USD/JPY daily

The USD/JPY daily chart has price hovering around channel resistance. If you zoom into an intra-day chart, you can interpret it as a break out then re-test of previous resistance as support, but the lack of momentum and obvious fundamental deficiencies here don’t have me jumping out of my skin to get long USD/JPY even though that is the obvious trade here. Well we know what normally happens to the obvious trade!

Cheers Glenn, it’s been real!

This Tuesday

AUD Cash Rate

AUD RBA Rate Statement

USD ISM Non-Manufacturing PMI

NZD GDT Price Index

CHF SNB Chairman Jordan Speaks

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Dane Williams – @VantageFX

This is a guest post originally appeared on Vantage FX. Reposted with permission.

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