Australia Continues to Face High Inflation.

The Australian dollar has been consistently strengthening over the past month, with this recent surge expected to be attributed to positive economic indicators. Despite the high inflation rate and some remaining constraints, there are indications of improving economic figures in certain sectors. It is also anticipated that the central bank will raise interest rates.

The numbers within the domestic workforce have exceeded expectations in the past month. The Australian Bureau of Statistics (ABS) revealed that there was an increase of 75,000 jobs, surpassing the projected 15,000 jobs and marking a significant rebound from the previous month's decrease of 4,300 jobs. The unemployment rate has dropped to 3.6%, compared to the projected and previous month's rate of 3.7%. The job vacancies that remain are primarily in high-skill positions and are considered vital drivers of the Australian labor market.

At the beginning of the week, statistics from New Zealand also revealed that there were 72,300 net migrants in April. This figure includes 98,400 non-New Zealand citizens arriving and 26,100 migrants leaving the country. The increasing influx of migrants may contribute to addressing the tight labor market, characterized by historically low unemployment rates of 3.4%.

However, the GDP (YOY) figures for the first quarter, recently announced, showed a slight downward adjustment with a growth of only 2.3% compared to the projected 2.4%. The Real Estate Institute of New Zealand (REINZ) revealed that house sales decreased by 0.4% on a yearly basis until the end of May. Additionally, New Zealand's statistics showed that food prices increased by 0.3% on a monthly basis in May, amounting to a 12.1% increase compared to the same period last year.

The Reserve Bank of Australia (RBA) recently raised its policy interest rate to 4.1% on June 7th. However, the Consumer Price Index (CPI) figures released in previous months only saw a minor reduction. This has led to speculations of further interest rate hikes in the future. The RBA needs to carefully consider interest rate adjustments to avoid a potential economic downturn.

Bjorn Jarvis, the Chief Economist at the Australian Bureau of Statistics, stated that the strength in the labor market indicates increasing pressure on inflation, which could prompt the RBA to raise interest rates further in the coming months. The strong labor market has been a crucial factor for the Australian economy in recent months, as it has struggled against unfavorable trends.

Regarding the recent Federal Open Market Committee (FOMC) meeting, the Federal Reserve (FED) decided to keep interest rates unchanged, as announced by Fed Chair Jerome Powell. The decision to maintain interest rates in this meeting is a temporary pause and does not signify a permanent halt to interest rate increases.

Technical analysis data (5H)

Resistance: 1.4722, 1.4774, 1.4812

Support: 1.4632, 1.4594, 1.4541

Source: Investing.com