Forex Blog
Blog-FX.Com

At the Forex currency market the Australian Dollar rate continues to decline on Tuesday, to a large extent due to the pressure caused by release of the last meeting minutes of the Reserve Bank of Australia.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, and is moving along the signal line, not giving any signals.

Stochastic Oscillator is moving is the similar way.Forex recommendations: in case of breakdown at the level of 1.0550, the pair will go to 1.0530 and 1.0490.

If downward breakdown does not take place, the pair will consolidate at the current levels.

Minutes of the last meeting of the Reserve Bank of Australia, released on Tuesday morning, stressed that inflation prospects in the country suggest further tightening; however recent macro-data does not encourage the rise in the rates. “Current inflation rate is partly due to the deflationary effects of the rise in interest rate and slowdown in the increase of expenditure for labour force,” stressed the document. The AUD fell amid such background, since investors did not like uncertainty in the RBA’s views.

The Reserve Bank of Australia 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 runs counter to the tone of the meeting minutes.

The head of RBA Mr. Stevens said earlier, that updated statistics will be available at the end of July; policy evaluation will be   based on it. According to him, eventually, at some point, the rise in the interest rate will become a necessity to control prices, however at the last meeting the level required to raise interest rate has not been reached.Thus, the Reserve Bank of Australia has confirmed its previous hawk opinion, despite the interval in the interest rate rise which has lasted for 6 sessions.

At the same time the RBA does not worry about high rate of the AUD, on the contrary, Stevens noted that expensive AUD promotes economic adjustment. It is worth noting that the RBA intends to pursue preemptive tactic, therefore, the rates can be raised before autumn.According to the data released this week, consumer confidence index Westpac in Australia fell by 2.6% m/m, to 101.2 points in June against preliminary forecast of decline by 1.3%, to 103.9 points. In addition, a number of begun construction in Australia increased by 3.1% q/q in Q1, while the forecast had been -0.6%. As it was announced earlier inflation in Australia increased by 0.2% m/m (+3.3% y/y), as per estimates of TD Securities. It is the index of average weighted inflation which is a guideline in decision making for the Bank of Australia.

The index is slowing down its growth rate at the moment (in April: +0.3% m/m), indicating, that prospects for the interest rate rise in the coming months are slipping away. It became known earlier that inflation expectations in Australia remained at the level of May at the level of 3.3% in June.

Tags: