The minutes of the RBA conference was rather controversial, leaving more questions than answers. The rhetoric was “dovish “in nature, although the ambiguity of the wording enables a different evaluation of the potential customers for the Australian currency. In today’s Asian session, the Reserve Bank of Australia published the minutes of its last meeting.
This file turned out to be rather controversial, leaving more questions than responses. In basic, the protocol’s rhetoric was”dovish” in nature, although the obscurity of the phrasing permits a different evaluation of the prospects for the Australian currency. At the January meeting of the RBA, the regulator reduced the forecast for economic growth in the nation to three percent from the previous worth of 3.5%. In the procedure, this circumstance is discussed by the fact that the level of unpredictability at the moment has actually increased in lots of methods. Firstly, we are talking about the slowdown of the Chinese economy and the world economy as an entire, as well as the Australian consumer activity. Here it is really necessary to note the truth that the volume indicator of retail sales in January collapsed in the unfavorable location for the first time since February 2018. It reached the level of -0.4 %with the forecast
of a decrease to absolutely no. Consumer belief index and activity index in the service sector also show weak dynamics, which is partially due to low wage growth. In truth, this figure has actually been stagnant for a very long time in spite of the decline in joblessness. All of these result in the reality that inflation in Australia remains regularly low at the level of 1.8% per year, while the target level of the Reserve Bank is set at around two percent.
Independently, the regulator stopped on the scenario in the Australian real estate market. Let me remind you that real estate has actually fallen in rate in almost all major cities of Australia especially in Sydney and Melbourne. Prices have actually been succumbing to 13 of the last 15 months and over the past three months, the rate of decline has actually sped up considerably. Because the peak tape-recorded in the fall of 2017, residential or commercial property in Australia has actually fallen in price by more than 6 percent. To some surprise, the Australian regulator took a rather unclear position on this issue. The ministry kept in mind that the expense of housing has actually been actively growing for a long time, thus the existing price reduction “is most likely to have just a little influence on the economy.” At the same time, the regulator alerted that if the existing dynamics is “more powerful”, this factor will not only reduce the level of consumption.
Naturally, members of the RBA did not ignore more worldwide problems. The Reserve bank is still concerned about the resumption of the trade war between China and the United States, as this trade dispute is a “substantial danger” for the worldwide financial outlook, according to the RBA. In Australia, they are seriously worried about the downturn in the Chinese economy, the rate of which turned out to be more powerful than their own forecasts.
Summarizing all the above, the regulator made a very ambiguous conclusion. According to the Reserve Bank, the rates of interest can either reduce or increase in the future and the probability of the execution of these alternatives is “practically the same”. At the minute there are no arguments in favor of a rate change (at least in the brief term), the regulator will adhere to stability in this matter.
The Australian dollar reacted to the released procedure with a minimum decrease by only 30 points, dropping to the bottom of the 71st figure. The indistinct rhetoric of the RBA did not allow the bears of the AUD/USD pair to seize the effort, thus, the price did not even test the boundaries of the 70th figure. n contrast to the head of the regulator Philip Low, the regulator members voiced a more unclear position that does not permit us to unequivocally speak about increasing the probability of a rate cut this year. The huge majority of specialists surveyed also tend to believe that the Central Bank will preserve the status quo in the foreseeable future. Majority of them believe that the rate will remain the same throughout this and next year, at least until the first quarter of 2021.
It deserves remembering that on Friday (February 22), the head of the Reserve Bank of Australia, Philip Lowe, will speak in the country’s parliament where he will report to members of the Standing Committee on Economics of your home of Representatives. The theme of his discussion involves a broad evaluation of the current scenario so he can more clearly identify the prospects for the country’s financial policy. On the other hand, provided the rhetoric of the released procedure, it is not likely to differ the announced course, especially against the background of a possible “truce” in between the United States and China. The characteristics of the labor market can likewise have a substantial influence on Aussie. The joblessness rate should stay at the very same five-percent mark however the increase in the number of employees will reduce somewhat to 15.2 thousand, relative to the previous month.
Overall, Aussie continues to trade in the flat, ranging in the 100 price point variety at 0.7060-0.7160. The levels of assistance and resistance are somewhat lower and somewhat greater than the indicated boundaries. Therefore, approaching the “round” mark of 0.70, there is a strong support level of 0.7030 where the lower line of the Bollinger Bands coincided with the upper limit of the Kumo cloud at this cost point on the day-to-day chart.
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