AUD/USD Outlook: RBA Lowers Growth Expectations as Inflation Soars
AUD/USD Daily Outlooks

AUD/USD Outlook: RBA Lowers Growth Expectations as Inflation Soars

  • Aussie is pushing lower due to dollar strength.
  • The RBA reduced the forecast for economic growth in Australia.
  • Australia’s central bank expects inflation to peak at 8% from a previous forecast of 7.75%.

Today’s AUD/USD outlook is bearish as the dollar extends Thursday’s gains. The pair is also losing ground as investors digest the RBA’s bleak economic outlook.

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The Australian central bank reduced the forecast for economic growth on Friday, stating that additional rate increases will be required to combat the country’s sky-high inflation while attempting to avert a complete recession.

The Reserve Bank of Australia (RBA) increased its inflation estimates in its quarterly Statement on Monetary Policy because it anticipates higher pay growth and forecasted a quicker increase in unemployment next year.

Even with subsequent rate rises, inflation is not expected to recover to the bank’s goal range of 2-3% by the end of 2024. This means a protracted period of suffering for consumers.

It also noted that another wave of floods had hurt the domestic food supply and that the predicted 20–30% increases in power and gas prices for the following year would probably slow the return of inflation to the target range.

It is now anticipated that consumer inflation will peak around 8% later this year, up from the forecast of 7.75% in August. By the end of the year, core inflation (the trimmed mean), which was previously 6.0%, will likely increase to 6.5%.

AUD/USD key events today

Markets will pay close attention to important U.S. employment data that will be released later today. According to economists surveyed by Reuters, nonfarm payrolls climbed by 200,000 jobs in October.

AUD/USD technical outlook: Bearish bias sustains despite a rebound

AUD/USD outlook

Looking at the 4-hour chart, we see the price trading below the 30-SMA and RSI below 50, showing a bearish trend. The trend was initiated when the price broke below 0.6390 after being rejected above the 30-SMA. Bears went on to make lower and lower highs, down to the next support level at 0.6275.

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Bulls have returned for a retracement that might retest the 30-SMA as resistance. The downtrend will continue if the SMA holds, and the price will probably retest and take out the 0.6275 support. However, if bulls push above the SMA, it would indicate a shift in sentiment from bearish to bullish.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.