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At the Forex currency market the Australian Dollar rate continues attempts to restore at the beginning of the week.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD; however it is moving along the signal line, not giving any sell signals. Stochastic Oscillator is growing in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0780, target for purchase will be the levels of 1.0820 and 1.0840. If a more significant upward breakdown does not take place the pair will consolidate close to the current levels.

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. 

On 10 May Finance Minister Swan will 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. 

According to the data released 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.

As it was made public earlier, 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. 

Economists were shocked by the data on the retail sales (-0.5% m/m against the growth by 0.8% in February): the indicator went down because sales in the department stores and super markets had been reduced. Interestingly, that it happens during the period of long term discounts in many stores.

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