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At the Forex currency market the Australian Dollar rate declines on Tuesday, because investors’ interest in risk is very low at the moment. Meanwhile strong statistics released this morning helps the AUD avoid significant sales.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and started to decline, forming a pair sell signal; while trading volume is slightly higher than average. Stochastic Oscillator is in the neutral zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0780, the levels of 1.0805 ? 1.0830 will be the target for the purchase. If upward breakdown does not take place the pair will consolidate close to the current levels.

The following Australian data was released today:

– Trade balance rose to A$1.74 billion in March against the level of -A$0.08 billion in February.

Therefore, surplus versus deficit was observed in February – which is a positive factor for the Australian economy which was caused by the growth of exports in iron ore and coal and also reduction of gasoline imports.

At the same time, index of export prices increased by 9% to A$25 billion in March; import rose by 1%. It became known earlier that index of import prices increased by 0.9% on quarterly basis in QI. Index of leading indicators rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia has been keeping interest rate unchanged for a long time.

Last week, the Reserve Bank of Australia outlined its vision of the prospects for the national economy. Thus, next week the RBA will announce measures to reduce government costs in order to restore budget surplus. If the program is implemented it will help Australia to maintain GDP growth, which has been observed over the past 20 years, and will also help curb inflation.  

Today, on 10 May, Finance Minister Swan shall announce details of the program. The situation is still complicated with respect to the interest rate: most probable that Prime Minister Julia Gillard will oppose the tightening of monetary policy, since the rise in the rates will create additional obstacles for the RBA. However the RAB is also set to increase interest rate because the boom in the mining sector triggers the growth of inflation, although at the same time contributes to maintaining stability in the employment sector. 

As it was made public last week, CPI in Australia increased by 1.6% on quarterly basis (+3.3% y/y) in QI. Therefore, inflation in the Green Continent has reached five-year highs; natural disasters have triggered the rise in costs for food and other consumption goods for people. In addition, commodity prices at the global markets remain high, because tension in the Middle East does not abate. RBA expects that net CPI will reach 3% against predicted 2.75% by the end of this year.

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