The Reserve Bank of Australia (RBA) has decided to keep interest rates unchanged for at least the next six months.

The Australian dollar has strengthened slightly, supported by the weakening U.S. dollar, as investors anticipate that the Federal Reserve may cut interest rates by 25 to 50 basis points at the September meeting. Additionally, the Australian dollar has been bolstered by a statement from Michelle Bullock, the Governor of the RBA, who said the RBA would not hesitate to raise interest rates again if inflationary pressures increase in the future.

Australia's inflation rate rose to 3.8% year-over-year in the second quarter of 2024, marking the first increase since the fourth quarter of 2022. Most of the inflation is concentrated in the services sector, which saw an increase of over 4.5%, particularly in alcohol and tobacco prices, which rose by 6.8%. Transportation costs also increased by 4.6%, driven by higher fuel prices, which have contributed to the rising costs of goods and services. The increase in transportation costs has directly impacted these costs. Meanwhile, inflation has decreased for food and financial services.

Australia's industry index contracted further in July, falling from 5.0 points to -20.7 points, indicating a contraction for the 27th consecutive month. The contraction is largely in the manufacturing sector, where production costs remain high, but sales have not increased significantly, leading to the third consecutive month of job shrinkage. Most businesses remain concerned about potential increases in inflation due to wage competition, while some have benefited from increased exports.

Job advertisements in Australia decreased by 3.0% month-over-month in July, marking the sixth consecutive month of declines in job postings amid continued weakening labor demand due to high borrowing costs and declining sales. Madeline Dunk, an economist at ANZ, stated that there is an increasing risk that the labor market could slow down more rapidly than expected, which may result in a greater decline than anticipated by the RBA, as indicated by the more than 20.8% year-over-year drop in job advertisements.

The yield on Australia's 10-year government bonds fell to around 4.1%, despite Michelle Bullock signaling that the RBA might raise interest rates to ensure inflation returns to the 2-3% target. Bullock also decided not to cut interest rates in the next six months, dashing investors' hopes for a rate cut this year.

Techical analysis data (5H)

Resistance: 1.5225, 1.5238, 1.5249

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.5192 - 1.5202 but cannot break the support at 1.5202, you may set a TP at approximately 1.5238 and SL at around 1.5179 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.5225 - 1.5238, you may set a TP at approximately 1.5249 and SL at around 1.5192 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.5225 - 1.5238 but cannot break the resistance at 1.5192, you may set a TP at approximately 1.5225 and SL at around 1.5249 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.5192 - 1.5202, you may set a TP at approximately 1.5179 and SL at around 1.5238 or according to your acceptable risk.

Pivot point August 9, 2024 09:08 PM. GMT+7