First Female RBA Governor Appointed Amid Economic Growth Concerns

Michele Bullock was appointed as the head of Australia's central bank, making her the first female governor in the bank's history. This appointment comes as the bank undergoes a comprehensive reorganization.

Concerns about the Australian economy have arisen following the release of data from the Australian Bureau of Statistics, indicating the weakest economic growth in the last 1-1/2 years. Signs of further economic softness have also emerged.

Australian Treasurer Jim Chalmers expressed his expectation that the country's jobless rate would increase from its nearly 48-year low. Chalmers attributed this anticipated rise to higher interest rates and a slowdown in global economic growth. Despite analysts' predictions of a steady 3.7% unemployment rate, the rate actually decreased slightly to 3.6% in May.

The Reserve Bank of Australia (RBA) has stated that a jobless rate of approximately 4.5% would be necessary to restore economic balance, although this level is still below pre-pandemic levels. The RBA has maintained the cash rate at 4.10%, its highest level in 11 years, and hinted at the possibility of further tightening.

The US dollar faced a substantial decrease in value over the course of a week, marking its most significant decline of the year. However, on Monday, it received a temporary respite as traders held off on further selling while waiting for economic data and policy decisions. Investors exercised caution due to their anticipation that the Federal Reserve is approaching the conclusion of its cycle of increasing interest rates, given the decrease in inflationary pressures.

The decline in the US dollar was exacerbated by recent data on producer and consumer inflation, which revealed easing price pressures. Producer prices showed minimal growth, with the smallest annual increase in almost three years. Consumer prices experienced modest gains. Additionally, import prices fell for the second consecutive month in June, indicating a reduction in inflationary pressures within the US economy. However, consumer sentiment in the US reached its highest level in almost two years, driven by a slowdown in inflation and a strong labor market.

US retail sales data for June is expected to demonstrate a 0.5% increase, driven by improved auto sales and higher gasoline station sales, suggesting resilient consumer demand. Reports on building permits, housing starts, and existing home sales will provide insights into the state of the housing sector. While high mortgage rates continue to impact existing home sales, construction is improving due to stable pricing and increased new home sales resulting from limited inventory. Additionally, reports on regional manufacturing activity are expected to show sluggish performance, along with weekly data on initial jobless claims.

Considering these factors, the AUD/USD trend may face mixed dynamics. The appointment of Michele Bullock and potential positive market sentiment could provide some support for the Australian dollar. However, concerns about the Australian economy and the possibility of an elevated jobless rate may exert downward pressure. Conversely, the weakening of the USD, the yield differential between the two nations, and an optimistic consumer sentiment may contribute to a potential strengthening of the US dollar.

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

Resistance : 0.6849, 0.6854, 0.6862

Support : 0.6831, 0.6826, 0.6818

5H Outlook

Source: Investing.com 

Buy/Long 1 If the support at the price range 0.6826 - 0.6831 is touched, but the support at 0.6831 cannot be broken, the TP may be set around 0.6850 and the SL around 0.6822, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 0.6849 - 0.6854, TP may be set around 0.6865 and SL around 0.6827, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 0.6849 - 0.6854 is touched, but the resistance at 0.6849 cannot be broken, the TP may be set around 0.6828 and the SL around 0.6858, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 0.6826 - 0.6831, TP may be set around 0.6810 and SL around 0.6853, or up to the risk appetite.       

Pivot Points Jul 17, 2023 02:25AM GMT

Sources: Investing 1, Investing 2