Worldwide macro overview for 21/03/2017: The last Minutes of the Reserve Bank of Australia policy conference highlighted the continuous improvement in the worldwide environment, the stronger-than-expected rise in Q4 GDP in Australia, and assumptions that regards to trade could be stronger than expected. However, the positive tone was contrasted with deepening real estate threat: “Current data continued to suggest that there had actually been a build-up of threats associated with the housing market. In some markets, conditions had been strong and costs were rising briskly, although in other markets prices were declining”, is the direct quote from RBA declaration. As we remember, the latest RBA decision was to keep the interest rates on hold at the level of 1.50% which is a record low level since August 2016. Some analysts state, that policymakers are reluctant to lower interest rates to avoid fanning an overheated home market, which appears to have actually run even hotter in the latter half of 2016. Home prices in Sydney and Melbourne specifically skyrocketed in 2016 thanks to a stable rise in financial investment. In conclusion, the GDP forecast was satisfied (GDP growth rebounded 1.1% in the last quarter of 2016.), however the overheated residential or commercial property market may get worse in the future.
Let’s now have a look at the AUD/USD technical picture in the H4 time frame. The market is trading in a tight horizontal zone between the levels of 0.7718 – 0.7740, simply below the swing top at the level of 0.7777. The marketplace conditions are overbought and a clear bearish divergence recommends a restorative cycle may come any time now. The next technical assistance is seen at the level of 0.7000 and after that 0.7662.
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