Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
The AUD showed some positive reaction towards the neutral decision of the Reserve Bank of Australia on leaving the interest rate unchanged at 1.50%. The Aussie stabilized near the lower limit of the midterm channel and is currently growing, though not so actively so far.
Thus, the RBA meeting in March ran as expected, and its president Mr Lowe said the overseas competition was doing better, which could be negative for the Australian trade. This intrinsic risk is still here to stay, despite the positive aspects of the Chinese economy, with China being one of the most important trading partners of Australia.
In terms of economy forecasts, the GDP in Australia is expected to go up more actively than last year, which means at least +0.7% per quarter, according to the RBA predictions. The economy will be most based on the target investments realized by the government within the infrastructure sector. In the long term, RBA is counting on export growth, while the most serious risks for the GDP growth is still household spending.
Meanwhile, the job market is no longer a trouble for the RBA, as jobs are growing more actively than before. The slowly growing wages may, however, be considered as a potential risk that can influence the GDP data if nothing changes.
The target inflation rate set by RBA is still the traditional 2%, although it’s currently below the target levels. Aussie is still viewed as somewhat too expensive, but the government are aware and do not want to interfere. Generally, no RBA statement can be considered as breaking news for the Aussie. Lowe’s commentary may be considered positive, and the RBA plans are quite optimistic, without being ambitious.
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Technically, AUD/USD is showing various trends of different scale. The dominating trend is an ascending one, while the important mid and short term trends are actually downtrends. In the short term, the downtrend is likely to continue, while the local support at $0.7731 is strongly preventing the price from heading further below. If broken out, though, it may allow the downtrend to continue to $0.7620.
The current channel resistance at $0.7795 may also be broken out, which will allow the price to head towards the upper projection channel. The primary target of such uptrend may be at $0.7876. To reach it, however, the price will first have to break out the midterm descending channel resistance at $0.7835.
Any forecasts contained herein are based on the authors’ particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.