RBA considering raising rates again

According to the minutes of the most recent meeting, which were released on Tuesday morning, analysts expect the Reserve Bank of Australia (RBA) to tighten monetary policy again after just announcing in early April that it would hold the rate at 3.6% in order to assess the impact of the policy on the economy and after signs that inflation may have peaked, following raising interest rates by more than 300 basis points in the previous 12 months.

However, the RBA governor recently hinted through the meeting minutes that rigorous policy may be reinstated. This is because inflation remains above the RBA's target range of 2% to 3% and is heavily reliant on economic indicators due out in late April to early May, such as the Consumer Price Index (CPI) and Producer Price Index (PPI) for the first quarter, as well as additional labor market reports. Prior to the announcement that the interest rate would remain unchanged in April, some policy committees discussed raising it another 25 basis points due to strong inflation and a tight labor market.

The RBA anticipates that inflation will achieve its target by mid-2025, with economic growth and the labor market expected to slow in the interim. While a growth in a country's population might result in higher inflation, particularly in the housing market.

Following better-than-expected Chinese economic growth figures, the US dollar currency pair fell against the majority of global currencies on Tuesday. China's GDP increased 4.5% year on year in the first quarter, exceeding the 4% forecast following the relaxation of COVID-19 constraints. Meanwhile, China's March retail sales increased by 10.6%, exceeding expectations and reaching a nearly two-year high. The manufacturing and industrial sectors expanded but still fell short of expectations.

The probability that the Fed will increase interest rates by 25 basis points at its upcoming meeting in May is still 83.4%, according to futures markets. Several market participants believe that this may be the final rally before interest rates are briefly held to observe any potential effects on the financial industry before cutting rates later this year. As a result, while the short-term upswing is anticipated to stay restrained, the market may momentarily shift into risk-on mode and boost the Australian dollar.

Data for Technical Analysis (5H) CFD AUD/USD

Resistance : 0.6741, 0.6745, 0.6753

Support : 0.6725, 0.6721, 0.6713                        

5H Outlook

1H Outlook

Source: Investing.com     

Buy/Long 1 If the support at the price range 0.6720 - 0.6725 is touched, but the support at 0.6725 cannot be broken, the TP may be set around 0.6745 and the SL around 0.6717, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 0.6741 - 0.6746, TP may be set around 0.6760 and SL around 0.6720, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 0.6741 - 0.6746 is touched, but the resistance at 0.6741 cannot be broken, the TP may be set around 0.6725 and the SL around 0.6749, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 0.6720 - 0.6725, TP may be set around 0.6708 and SL around 0.6745, or up to the risk appetite.       

Pivot Points Apr 19, 2023 02:38AM GMT

Sources: Investing 1, Investing 2