The Reserve Bank of Australia basically left the statement unchanged as well as the rates unchanged, as expected. Yes, they did mention the high value of the Australian dollar, but there wasn’t anything new.
Combined with some positive retail sales data, AUD/USD managed to rise above 0.87. Is it out of the danger zone?
Here is the paragraph relating to the exchange rate in the statement. Glenn Stevens and his colleagues acknowledge the lower levels of the Aussie, but aren’t really happy, especially as commodity prices have fallen as well:
The exchange rate has traded at lower levels recently, in large part reflecting the strengthening US dollar. But the Australian dollar remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices in recent months. It is offering less assistance than would normally be expected in achieving balanced growth in the economy.
Earlier, Australia reported a surprising rise of 1.2% in September’s retail sales, 4 times the early expectations for 0.3% and much better than 0.1% in August. The trade balance disappointed with a large deficit of 2.26 billion, more than 1.78 billion expected. However, the health of the domestic consumer had the upper hand.
Support appears at the round number of 0.87, followed by the previous double bottom of 0.8660. Resistance is at 0.8765, with more important resistance at 0.8820.
For more, see the AUDUSD forecast.
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