Australia's economy shows signs of slowing down.

The Australian dollar remains stable after weakening in the past week, as investor sentiment has improved, particularly in the stock market and risk assets that have rebounded quickly. Investors are also awaiting the release of Australia’s Q4 economic growth data on Wednesday. Additionally, the minutes from the Reserve Bank of Australia’s (RBA) meeting, set to be published on Tuesday, may provide further insights into future interest rate directions. However, investors are still monitoring the impact of Trump’s tax hikes on major trading partners and diplomatic efforts to resolve the conflict in Ukraine.

Job postings in Australia declined by 1.4% month-on-month in February, following a 1.3% increase in the previous month, marking the first drop since 2024. On a yearly basis, job postings fell by 9.2%, indicating pressure on the domestic economy. This also reflects a slowing labor market after the addition of over 44,000 jobs in January.

Corporate profits in Australia grew by 5.9% quarter-on-quarter in Q4 2024, surpassing the forecast of 1.5% and recovering from a 4.9% decline. This marks the first increase in corporate profits and the strongest growth in years. The profit increase was mainly driven by the service sector, including wholesale trade, administrative and support services. Additionally, profits in the financial and insurance sectors surged by 36.2%, making them the fastest-growing industries.

Australia’s manufacturing PMI slightly declined to 50.4 in February, still indicating expansion for the second consecutive month. Despite domestic economic pressure from high production costs and persistent inflation, new orders rose for the first time since 2022, largely supported by export orders. Meanwhile, companies are exercising greater caution in hiring due to slowing output, leading to an excess workforce relative to production capacity. However, production costs have slightly decreased, supported by tax reductions.

Australia’s Consumer Price Index (CPI) increased by 2.5% month-on-month, slightly below market expectations of 2.6%, but inflation remains high since August 2024. Food prices saw the largest increase in three months at 3.3%, mainly due to a 12.3% surge in fruit costs. Meanwhile, housing inflation hit a five-month high as rental prices continued to rise, while electricity prices dropped to a six-month low. Core inflation, which excludes volatile food and energy prices, rose to 2.9%, marking its highest increase in five months.

The yield on Australia’s 10-year government bonds surged to 4.37% as investors await Q4 GDP data, which is expected to show strong growth. Additionally, trade balance and retail sales data for January will be closely watched. The RBA's reports remain crucial as they may provide insights into the first interest rate cut in four years and progress in controlling inflation. However, the slowdown in job postings remains a key factor pressuring the domestic economy. In the U.S., the PCE price index increased slightly, leading investors to speculate that the Federal Reserve may delay interest rate cuts.

Techical analysis data (5H)

Resistance: 1.606, 1.6103, 1.613

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.5963 - 1.5991 but cannot break the support at 1.5991, you may set a TP at approximately 1.6103 and SL at around 1.5921 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.606 - 1.6103, you may set a TP at approximately 1.613 and SL at around 1.5963 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.606 - 1.6103 but cannot break the resistance at 1.606, you may set a TP at approximately 1.5963 and SL at around 1.613 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.5963 - 1.5991, you may set a TP at approximately 1.5921 and SL at around 1.6103 or according to your acceptable risk.

Pivot point March 3, 2025 10:43 PM. GMT+7