Australia's service sector remains bustling.

The Australian dollar weakened slightly as the US dollar strengthened on the back of strong US economic data. Additionally, the weakening of the Australian dollar aligns with declines in other risk assets such as copper and oil. Tight labor market conditions have raised concerns about potential interest rate hikes by the Reserve Bank of Australia (RBA). Despite a slight increase in the unemployment rate, the market perceives a 20% chance of a rate hike by the RBA in August, up from 12% earlier this week. Furthermore, it is expected that the RBA will start easing monetary policy much later than other central banks due to ongoing inflation issues.

Australia's leading economic index was flat in June, marking three consecutive months of stability. However, there is a possibility that economic activity in the next 3-9 months could improve, with the index rising to -0.13% from -0.28%. Nonetheless, indications suggest that weak growth momentum will continue into the second half of 2024 and early 2025. As a result, GDP growth in the first half of 2024 is forecasted to be only 0.8%.

Australia's unemployment rate was 4.1% in June, higher than the market expectation of 4.0%. The number of unemployed people increased by 9.7 thousand to 608.2 thousand, mainly due to a rise in part-time job seekers, which increased by 7.5 thousand to 206.4 thousand. Meanwhile, employment rose by 50.2 thousand to 14.41 million, marking the highest increase in four months.

Consumer inflation expectations in Australia dropped to 4.3% in July due to easing cost pressures. However, recent data still shows continued inflation in the services sector, driven by a tight labor market in this sector. Additionally, government support for energy prices might decrease due to increased budget usage, although it temporarily reduces inflation.

The yield on Australia's 10-year government bonds rose above 4.3% as investors remain uncertain about the Australian economy and the RBA's monetary policy outlook. Investors anticipate that the RBA may further hike interest rates due to persistent inflationary pressures and a tight labor market. Moreover, the latest meeting minutes indicate that policymakers remain concerned about inflation and may raise interest rates again if necessary.

Techical analysis data (5H)

Resistance: 1.5111, 1.5119, 1.5133

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.5075 - 1.5088 but cannot break the support at 1.5088, you may set a TP at approximately 1.5119 and SL at around 1.5066 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.5111 - 1.5119, you may set a TP at approximately 1.5133 and SL at around 1.5075 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.5111 - 1.5119 but cannot break the resistance at 1.5075, you may set a TP at approximately 1.5111 and SL at around 1.5133 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.5075 - 1.5088, you may set a TP at approximately 1.5066 and SL at around 1.5119 or according to your acceptable risk.

Pivot point July 23, 2024 08:13 PM. GMT+7