The RBA delivered its minutes for the meeting held two weeks ago. In this meeting, the bank decided to leave interest rates and quantitative easing policies unchanged as most analysts were expecting.
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In the minutes, the bank said that it is watching wages closely as the country emerges from its first recession in more than three decades. As such, it insisted that it will only hike rates if wages rise above 3%, which will happen by 2024.
The RBA also said that it was watching the ongoing government programs that are helping the economy in its recovery process. For example, the JobKeeper program is expected to end in the next few months. In a statement last month, Scott Morrison said that his government will start prioritising the fiscal health of the economy.
The AUD/USD is also falling because of the relatively low commodity prices. Most commodities like copper, silver, and iron ore have declined today, in part because of the stronger US dollar. This decline is also partly because of profit-taking as investors question their future demand.
Meanwhile, the performance of the bond market is playing a role. In Australia, the yield on the government’s 10-year bonds declined to 1.70% even after strong house prices. Data revealed that the house price index (HPI) increased from 0.8% to 3.0% in the fourth quarter. This was faster than the median estimate of 2.0%.
The AUD/USD is also falling because of the stronger dollar as forex traders wait for the Fed interest rate decision. The bank will start its meeting today and deliver its verdict tomorrow. In general, economists expect the bank to leave its pandemic response tools unchanged.
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AUD/USD technical forecast
The four-hour chart shows that the AUD/USD price has formed a symmetrical triangle pattern. In our free forex trading course, you will find that this pattern is usually a sign of consolidation. In most cases, the price typically breaks-out in either direction. Also, the pair is slightly below the 25-period and 15-period weighted moving averages.
Therefore, the Aussie will likely break-out lower as bears target the next key support at 0.7670. However, a break above 0.7780 will invalidate this trend.