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At the Forex currency market the Australian Dollar rate goes down in the middle of the week despite favourable data on the level of mortgage lending.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, moving upward from the signal line, and giving a shape to a buy signal. Stochastic Oscillator goes down in the neutral zone   giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0650, the pair will go to 1.0630 ? 1.0610. If downward breakdown does not take place, the pair will consolidate at the current levels.

According to the data released on Wednesday, mortgage lending in Australia increased by 4.8% m/m in April. Meanwhile, revised data on mortgage lending for March amounted -1.1% (-1.5% m/m previously). Therefore, Australian economy continues to recover from the flooding in January. Another reason that helps improvement in the mortgage sector is market’s belief that the RBA will keep interest rate unchanged for a long time.

The Reserve Bank of Australia has left interest rate at the previous level of 4.75% per annum and stressed that current course of policy is quite acceptable, which triggered sales of the AUD because it might mean that monetary policy tightening will continue to be suspended in the next few months.

It was announced earlier that inflation in Australia increased by 0.2% m/m (+3.3% y/y), as per TD Securities estimates. It is the weighted average inflation index which is a guideline in decision making for the Bank of Australia, and it is slowing down its growth rate now (in April: +0.3% m/m), indicating that prospects of the increase in the interest rate in the coming months are slipping away.

It became known last week that index of business activity in the Australian service sector (PSI) declined to 49.9 points in May. Therefore, it fell below the key level of 50 points. In April the indicator grew to 51.5 points.

The RBA admits that if economic situation will develop according to expectations, interest rate increase will become a necessity.

Earlier representatives of the Ministry of Finance in Australia said that level of GDP is not the way to determine further movement of economy, although the Ministry still expects further improvement in the country’s economic growth. We would remind that GDP in Australia fell by 1.2% on quarterly basis (+1.0% y/y) in QI, which is the maximum fall in 20 years. 

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