- Reserve Bank of Australia (RBA) does not see a strong case for a near-term move in interest rates.
- AUD/USD barely moved, bulls need a break above 0.7565 (38.2 percent Fibonacci retracement of Apr-May sell-off).
The minutes of the RBA May monetary policy meeting released a few minutes ago showed the policymakers do not see a strong case for a near-term interest rate hike but believe the next move will likely be a rate rise rather than a rate cut.
Key points
- An appreciation in the a$ would slow expected acceleration in growth, inflation
- Inflation to remain low for some time given retail competition, slow wage growth
- Wages expected to pick up gradually as leading indicators pointed to more job gains
- Still uncertainties remain on the extent, speed of pick-up in wages and inflation
- Strength in employment has supported household consumption so far
- High household debt poses uncertainty for consumption outlook
- Consumption “Relatively resilient” to slower growth in household income over recent years
- Conditions in global economy positive, china debt levels an important risk
Overall, the minutes offered little that markets do not know and need to price-in. Hence, the AUD/USD has barely moved post-RBA minutes release. As of writing, the currency pair is trading at 0.7532.
AUD/USD Technical Outlook
The 5-day moving average and the 10-day moving average is curled up in favor of the bulls, signaling a short-term bullish reversal. The resistance is seen at 0.7565 (38.2% Fib R of Apr. 19 high – May 9 low), 0.7643 (Mar. 29 low) and 0.7672 (March 21 low). Meanwhile, support is seen at 0.7511 (10-day MA), 0.7473 (May 1 low), and 0.7412 (recent low).
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