Dealing with inflation in Australia might take longer than expected.

The Reserve Bank of Australia (RBA) has decided to maintain the interest rate at 4.1%, which is lower than the anticipated 4.35%. This marks the second consecutive month of keeping the interest rates unchanged. Simultaneously, there is discussion about easing cost pressures in the country. Despite these factors, the RBA still considers the inflation rate of 6% to be relatively high and may require further interest rate hikes to ensure that inflation returns to the target range of 2-3%. However, any future adjustments in interest rates will also be contingent on the economic conditions at that time.

Forecasts from other policy makers suggest that the inflation rate might decrease to around 3.25% by the end of 2023 and return to the intended target range by late 2024. Predictions about Australia's GDP growth estimate it to be around 1.75% in 2023, with a continuous increase in unemployment up to 4.5% by the end of the following year. The escalating unemployment figures can provide insight into the country's struggling economy.

Retail trade data in Australia has shown a 0.8% decrease month-on-month (MoM), following a previous month's growth of 0.8%. This marks the second decline in retail trade this year. The current decrease is believed to be influenced by pressures on household costs, impacting consumer spending. Within this, spending in department stores has seen the most significant reduction, followed by other retail outlets. The possibility of further interest rate increase to 4.35% in the third quarter is balanced by the likelihood that retail trade reduction might be a contributing factor.

Exports of goods and services from Australia decreased by 1.7%, amounting to $55.63 billion AUD in June. The majority of exported goods were fuel, minerals, and others. The significant contraction was primarily due to a decline in coal exports. Meanwhile, revenue generated from services increased by 2.1%, reaching a value of $90.5 billion AUD. This growth was supported by increased domestic and international travel. Additionally, imports of goods and services to Australia decreased by 4.0% on a monthly basis (MoM), marking the lowest figure in the past three months, at $44.30 billion AUD in June.

In terms of Australia's 10-year government bond yield, it initially rose to 4.2% before experiencing a slight adjustment. This increase came after the latest policy meeting report from the Reserve Bank of Australia (RBA), indicating the RBA's willingness to extend the timeframe for its inflation target and hinting at a potential continuation of the tight monetary policy. This adjustment occurred alongside a reduction in the economic growth forecast to 0.9% for the year, down from the previous estimate of 1.2%.

Techical analysis data (5H)

Resistance:: 1.5261, 1.5284, 1.5319

Support: 1.5203, 1.5168, 1.5145

Source: Investing.com