AUD/USD trades near 0.7080 at early Wednesday.
The pair didn’t give much attention to the speech from RBA’s Lowe as he repeated earlier rate bias giving equal importance to probabilities for a rate hike and a rate cut.
The AUD/USD clings to 0.7080 during the early Asian session on Wednesday. The pair refrained from registering much volatility despite the RBA Governor’s speech as Mr. Lowe reiterated earlier rate hike/cut bias giving even probabilities to either side moves.
At 21:10 GMT, the Reserve Bank of Australia (RBA) Governor Phillip Lowe appeared for a speech at the Australian Financial Review’s Business Summit, in Sydney. The subject was “The Housing Market and the Economy”.
On Tuesday, the RBA cited trade tensions and household spending a major uncertainty while keeping the cash rate unchanged at 1.5%. The Australian central bank also praised low interest rates as a support to the economy where unemployment and inflation could improve gradually.
Headlines from the speech: (Source: Reuters)
- The RBA Governor says has flexibility to adjust monetary policy in either direction.
- Plausible scenarios where rates go up and where rates go down.
- At moment, the probabilities appear “reasonably evenly balanced”.
- Labour market is key issue, recent data have been encouraging.
- Other economic indicators “paint a softer picture”.
- GDP growth in second half of 2018 was clearly less than in first half.
- Growing tension between strong labour market data and softer GDP data.
- Adjustment in housing market is manageable for overall economy.
- Less than 5% of indebted owner-occupier households have negative equity.
- Liaison showed some lenders became more cautious last year.
- Credit conditions tightened more than was probably required.
- Important that banks are prepared to take credit risk.
- Tightening in credit supply contributed to slowdown in credit growth.
- But main story is one of reduced demand for credit, rather than reduced supply.
- Wealth effects influencing consumption, but mainly through income expectations.
- This means developments in labour market particularly important.
AUD/USD Technical Analysis
A horizontal-line connecting February low to early January highs around 0.7050 seems immediate support for the AUD/USD pair. A break of 0.7050 highlights the importance of 0.7015, 0.7000 and 0.6980 as supports.
On the upside, 0.7100 and the present month high near 0.7120 may limit the pair’s nearby advances.