RBA interest rate decision
The Australian Central Bank concluded its two-day meeting today and did what most analysts were expecting. It left interest rates unchanged at the record low of 0.1%, where they have been in the past four months.
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Further, the bank continued with its yield curve control program, where it is targeting the 10-year yield at 0.10%. Most importantly, the RBA hinted that it will not hike interest rates until 2024 in a bid to support the economy.
The RBA also focused on the housing sector, which has received a boost by low-interest rates. House prices have grown at the fastest pace since 1988 and the trend will likely continue. In the statement, the RBA said:
“Given the environment of rising housing prices and low-interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”
The RBA decision came at a time when the Australian economy is growing rapidly after plunging in 2020. This growth has been helped by the relatively strong commodity prices and the rising demand from China.
Last week, data by Markit revealed that the country’s manufacturing PMI remained above 50, in a sign that the sector is still robust. Most notably, while the government’s JobKeeper program is set to end, most analysts believe that the impact to the labour market will be relatively muted.
Later this week, the AUD/USD price will react to the RBA financial stability review scheduled for Friday. It will also react to the services PMI and the building approvals numbers. The US bond market will also influence the pair. Today, the 10-year yield has dropped to 1.711% while the 30-year has dropped to 2.360%.
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AUD/USD technical forecast
The AUD/USD dropped to a year-to-date low of 0.7530 in March this year. Since then, it has been attempting to rebound but has found substantial resistance at 0.7662. Today, the price has moved below the 78.6% Fibonacci retracement level. It is also at the same level as the lowest point on March 9 and is between the middle and upper line of the Bollinger Bands. Therefore, the AUD/USD may resume the upward trend if forex traders are able to move above 0.7662. However, a drop below 0.7600 will invalidate this trend.