RBA Holds Rates Amid Economic Uncertainty

Australia’s APRA has decided to keep a 3% serviceability buffer for home loans due to ongoing economic vulnerabilities, such as high household debt, a slowing job market, and persistent cost-of-living challenges. Although inflation has moderated and interest rate hikes seem less imminent, risks like non-performing loans and potential income shocks remain significant. Banks are required to assess borrowers' repayment capacity at rates 3% higher than the prevailing home loan rate to safeguard financial stability.

Meanwhile, the RBA has held its cash rate at 4.35%, its highest in over a decade, to ensure inflation continues to decline. While headline inflation fell within the target range of 2-3% last quarter, core inflation remains stubbornly high. The RBA expects inflation to stay above target until 2026 and sees no immediate need to adjust rates. The RBA emphasized its forward-looking approach, focusing on data such as inflation, credit growth, and employment trends to avoid premature or overly delayed policy adjustments.

The dollar eased slightly on Monday as bond yields dropped, with investors welcoming President-elect Donald Trump’s nomination of Scott Bessent as Treasury Secretary for his fiscal conservatism. After eight consecutive weeks of gains, the dollar appeared poised for consolidation.

U.S. consumer sentiment improved for the fourth straight month in November, fueled by optimism following Trump’s election. Additionally, the Composite PMI Output Index rose to a 31-month high, signaling optimism about potential pro-business policies. Despite these trends, economic growth remained steady, with GDP expanding at an annualized rate of 2.8% in the third quarter and estimated to rise at 2.6% in the fourth quarter.

Looking ahead, the release of the PCE Price Index, the Fed’s preferred inflation gauge, will be critical in shaping expectations for monetary policy. Stubborn inflation data have kept the Federal Reserve cautious about further rate cuts, with markets divided on whether a December cut will occur amid uncertainty over inflation trends under the incoming administration. This could result in the AUD/USD pair potentially trading within the current range, with the possibility of moving slightly towards the lower boundary for the time being.

Data for Technical Analysis (1D) CFD AUD/USD

Resistance : 0.6547, 0.6552, 0.6561

Support : 0.6529, 0.6524, 0.6515

1D Outlook

Source: TradingView

Buy/Long 1 If the support at the price range 0.6499 - 0.6529 is touched, but the support at 0.6529 cannot be broken, the TP may be set around 0.6550 and the SL around 0.6484, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 0.6547 - 0.6577, TP may be set around 0.6597 and SL around 0.6514, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 0.6547 - 0.6577 is touched, but the resistance at 0.6547 cannot be broken, the TP may be set around 0.6527 and the SL around 0.6592, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 0.6499 - 0.6529, TP may be set around 0.6480 and SL around 0.6562, or up to the risk appetite.       

Pivot Points Nov 25, 2024 02:53AM GMT