The Reserve Bank of Australia (RBA) decided to cut interest rates by 25 bps in February meeting.

The Australian dollar remains under pressure from the US dollar due to recent comments from President Donald Trump regarding tariffs, raising concerns about a potential global trade war. Trump stated on Monday that tariffs on Canada and Mexico would continue, although their implementation has been delayed by another month. Additionally, investors are awaiting Australia's inflation report on Wednesday, which is expected to provide insights into the future direction of monetary policy.

Australia's manufacturing PMI rose to 50.6 in February from 50.2 in January, marking the second consecutive month of expansion in over two years. However, overall growth remains sluggish, as output in the manufacturing sector has increased only slightly. Furthermore, export orders continue to decline, making manufacturers more cautious about costs, especially as material and wage expenses continue to rise. This has resulted in an ongoing decline in overall employment within the manufacturing sector.

The services PMI increased to 51.4 in February from 51.2 in January, reaching a six-month high. This reflects an acceleration in the expansion of the services sector, driven by strong demand and growth in new business, leading to significant investment inflows. Although export orders remain low, employment continues to rise, keeping workload distribution aligned with staffing levels. Despite this, input costs have surged at the fastest pace since September 2024. However, businesses are becoming increasingly cautious in their operations due to economic uncertainty and persistently high interest rates.

Australia’s leading economic index rose by 0.1% month-on-month in January, after remaining unchanged the previous month. Meanwhile, the economic growth outlook for the next 3–9 months surged to a two-year high of 0.58%, up from 0.24% in December. It is forecasted that GDP will gradually improve in 2025, reaching 2.2% year-on-year by the end of the year. Matthew Hassan, Head of Macroeconomic Forecasting for Australia, expects further monetary easing this year following the central bank’s 25-bps rate cut in its first monetary policy meeting of 2025.

The RBA cut the cash rate by 25 basis points to 4.1% during its February meeting, in line with market expectations. This was the first rate cut since 2020, prompted by the slowdown in core inflation. The move has increased the central bank’s confidence that inflation will sustainably return to its target range of 2-3%.

However, the central bank emphasized ongoing economic uncertainty, noting a slower-than-expected recovery in personal demand and uncertainties surrounding household spending recovery. External risks also remain a factor to watch, particularly geopolitical uncertainties and foreign policy developments. As a result, policymakers remain cautious about further monetary easing.

Techical analysis data (5H)

Resistance: 1.5791, 1.5808, 1.5837

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.5716 - 1.5745 but cannot break the support at 1.5745, you may set a TP at approximately 1.5808 and SL at around 1.5699 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.5791 - 1.5808, you may set a TP at approximately 1.5837 and SL at around 1.5716 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.5791 - 1.5808 but cannot break the resistance at 1.5791, you may set a TP at approximately 1.5716 and SL at around 1.5837 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.5716 - 1.5745, you may set a TP at approximately 1.5699 and SL at around 1.5808 or according to your acceptable risk.

Pivot point February 25, 2025 08:30 PM. GMT+7