RBA will announce its interest rate decision during tomorrow’s Asian session (04:30 GMT) and is expected to remain on hold at +1.50%. Currently, AUD OIS imply a probability for the bank to remain on hold of 99.67%. As the interest rate is expected to remain on hold, market focus could turn to the accompanying statement. Comments could be raised about the inflation rate, as it accelerated to +2.1% yoy for Q2 of 2018, and broke the lower threshold of RBA’s inflation target range of +2.00% yoy to +3.00% yoy. With an accelerating inflation rate as well as the retail sales growth rate and at the same time a rather low unemployment, the accompanying statement could have a more hawkish tone and support AUD, while on the other hand international trade tensions could increase uncertainty somewhat.
AUD/USD continued its sideways movement on Friday, touching the 0.7410 resistance line. We could see the pair continue its sideways movement with some bullish tendencies as the market may position itself ahead of RBA’s interest rate decision. Should the pair come under buying interest we could see it breaking the 0.7410 resistance level and aim for the 0.7440 resistance area. On the other hand, should the pair come under selling interest we could see it breaking the 0.7370 support line and aim for the 0.7345 support area.
On Thursday’s Asian morning, the Australian labour market report came out impressively strong for June. The report indicated that 50.9 K jobs were created in June, the largest number since past November but also a figure 3 times larger than expected (17 k) .However, unemployment remained constant at 5.4%. Comments made by officials after the release indicated that with the labour supply still growing, less upward pressure was applied on wages and inflation so RBA is not expected to rate hike anytime soon.
AUD/USD advanced upon the release of the news and landed above our 0.7400 support level. We support the opinion that the Aussie could continue to move in a sideways movement between the 0.7460 resistance level and the 0.7400 support level as this was mostly the case in July. In any case, should the pair come under buying interest we could see the pair breaking the 0.7460 resistance line continuing higher aiming for the 0.7515 resistance level. Should the bears dominate the pairs direction we could see it breaking the 0.7400 support line and aim for the 0.7355 support barrier.
As was widely expected RBA stayed on hold at +1.50%. The accompanying statement had some dovish tones, as it expects inflation to remain low for some time while wage growth remains low and is likely to continue for a while yet. Other points which are worth mentioning is that household consumption remains a source of uncertainty and that there are concerns about the direction of the international trade policy in the US. AUD/USD treated the decision as a non-event as the market had positioned itself ahead of the release of the decision. Should the financial releases this week, support a more hawkish stance on behalf of the RBA in the future, we could see the Aussie strengthening.
AUD/USD rose yesterday aiming for the 0.7680 resistance level in the European session, however stabilized and corrected somewhat downwards, ahead of the RBA decision during the today’s Asian session. The pair could trade in a sideways manner today with some bearish tones at the aftermath of the RBA interest rate decision and ahead of the US financial releases. Should the pair come under selling interest we could see it reaching and even breaking the 0.7575 support line. If it finds fresh buying orders along its path we could see it breaking the 0.7680 resistance line and aim for the 0.7820 resistance hurdle.