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  • AUD/USD remains flat above 0.76 even as the RBA revises 2020 growth forecast higher. 
  • The central bank is unlikely to raise rates before 2024 despite improvement in the economic outlook. 
  • Australia’s Retail Sales fell by 4.1% in December. 

AUD/USD struggles to gather upside traction despite the Reserve Bank of Australia’s (RBA) upbeat take on the economy. The central bank’s dovish stance on interest rates looks to be keeping the bulls at bay. 

The RBA’s Statement of Monetary Policy (SoMP) released at 00:30 carried an upward revision to the 2020 gross domestic product (GDP) forecast and the downward revision of the jobless rate forecast out to 2022. 

However, the statement reiterated that policymakers do not expect to reach inflation and employment target before 2024, meaning interest rates are unlikely to rise any time soon. 

While the economy’s outlook has improved, the central bank won’t raise rates until inflation rises above 2% and stays there for some time, Governor Lowe said early Friday. The Federal Reserve adopted similar inflation targeting policy in August last year. 

The dismal Aussie data released at 00:30 GMT could be another reason for AUD’s muted reaction to RBA’s upward revision of growth forecast. As represented by Retail Sales, Australia’s consumer spending fell 4.1% month-on-month in December versus the preliminary projection of a 4.2% drop. The decline was expected following the strong Black Friday sales in November. Nevertheless, the negative print could be keeping buyers on the sideline. 

AUD/USD is currently trading largely unchanged on the day near 0.7605, having jumped from 0.76 to 0.7610 following the SoMP’s release. 

Technical levels