AUD/USD extends losses as RBA's SoMP cuts GDP forecasts

• AUD/USD downside gathers steam as RBA cut GDP forecasts. 
• The central bank expects jobless rate to remain at 5.1% till December 2020.
• Policy to remain accommodative for some time and more easing may be required if the jobless rate rises, the SoMP said. 

The bearish pressures around the Australian dollar strengthened, pushing the AUD/USD pair to fresh session lows near 0.6715 after the RBA's Statement of
Monetary Policy (SoMP) cut growth forecasts and said the policy is expected to remain accommodative for some time.

Cuts GDP forecasts

The RBA has revised lower the GDP forecast for Q4, 2019 to 2% from the previous forecast of 2.3%. The growth forecast for June 2020 quarter has been revised lower to 1.9% from 2.6%. Meanwhile, the growth rate is seen rebounding to 3% by December 3%. 

The central bank expects trimmed mean inflation to rise to 2% by June 2022 and sees jobless rate remaining steady at 5.1% this year and falling to 4.9% in December
2021. 

The SoMP mentioned that its forecasts are based on the technical assumption of one 25 bps rate cut in mid-2020.

The AUD/USD pair, which was already trading on the defensive near 0.6725, extended losses to 0.6715 following the SoMP. 

The currency pair may slide further to recent lows near 0.6680, as the SoMP said that risk might shift in favor of more easing if the unemployment rate were to be "moving materially higher" and if there was no further progress being made on lifting inflation. 

Moreover, governor Lowe was out on the wires earlier today, stating that the negative impact of the coronavirus outbreak on the Australian economy could be far bigger than the SARS episode of 2002-2003.

Technical levels