AUD/USD slips to five-week low after RBA's SoMP revised lower GDP forecasts

• RBA’s quarterly Statement on Monetary Policy (SoMP) downgraded forecasts for economic growth substantially, sending the AUD lower across the board. 
• The downward revision to growth and inflation forecasts was expected. The move will likely push up the odds of a rate cut. 
• AUD/USD has slipped to two-week lows below the crucial support of 0.7076 (Jan. 25 low). A close below that level would open the doors for a sustained drop to 0.70. 

Reserve Bank of Australia's decision to revise lower the growth and inflation forecasts isn't boding well for the Aussie dollar. The AUD/USD pair dropped to 0.7065 soon before press time; its lowest level since Jan. 4. 

The central bank revised lower 2018 and 2019 annualized GDP forecast to 2.8 percent and 3 percent, respectively and now sees the economy expanding 2.7 percent in 2020 and 2021. Further, the 2019 and 2020 inflation forecasts have been revised to 2 percent and 2.1 percent, respectively. 

The SoMP also reiterated the message delivered by governor Lowe earlier this week that a cut is now as equally likely as a lift in borrowing costs.

The cut in inflation and growth forecasts is hardly surprising as increasing consumer anxiety with regards to jobs and inflation and the slowdown in the housing market could have a negative impact on spending. 

Nevertheless, the AUD is losing altitude as RBA's decision to revise lower growth and inflation expectations could force markets to price in an early rate cut. 

AUD/USD Technical Levels