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RBA

QE Tapering Plan Will Go On (06 August 2021)Three days ago, the Reserve Bank of Australia (RBA) delivered a little surprise when it decided to stick with its quantitative easing (QE) plan announced back in July despite the recent spike in COVID cases in Australia. (Refer to my post "RBA Sticks With QE Tapering Plan (04 August 2021)" on RBA monetary policy) Details on why the central bank decides to proceed with its decision on QE tapering were provided during Governor Lowe testimony earlier today. Lowe’s Testimony During his testimony before the House of Representatives Standing Committee on Economics, Governor Lowe said that the RBA has considered holding back its plan for QE tapering during the monetary policy meeting. However, the central bank’s positive projections on the economic growth for 2022 permitted the plan to continue. Lowe explained that “any additional bond purchases would have their maximum effect at that time and only a very small effect right now when the extra support is needed most.” Furthermore, he mentioned the RBA felt that fiscal policy would be more appropriate than monetary policy in terms of providing aid at the moment. Nonetheless, the flexible approach of its QE programme allows the central bank to make adjustments to the rate of bond purchases in response to any unexpected turn of events. On the subject of the RBA cash rate, Lowe highlighted that the central bank will not be increasing cash rate until inflation is sustainably in the 2-3% range. He emphasised that the RBA needs to be confident that inflation will remain within the targeted range before any rate hike is considered. Finally, Lowe said that the condition for a rate hike “is not expected to be met before 2024”. RBA economic projections. For year 2021, Australian GDP: 4.00 (4.75) CPI Inflation: 2.50 (1.75) Unemployment Rate: 5.00 (5.00) For year 2022, Australian GDP: 4.25 (3.50) CPI Inflation: 1.75 (1.50) Unemployment Rate: 4.25 (4.50) For year 2023, Australian GDP: 2.50 (N/A) CPI Inflation: 2.25 (N/A) Unemployment Rate: 4.00 (N/A) *Figures shown in parentheses refers to projections from May 2021
by GH_Lee
RBA Sticks With QE Tapering Plan (04 August 2021)The RBA’s decision. During their monetary policy meeting yesterday, the Reserve Bank of Australia (RBA) kept its monetary policy unchanged, holding interest rate at 0.10% and quantitative easing (QE) at a rate of A$5 billion per week. A little surprise. With the recent spike in COVID cases in Australia due to the highly contagious Delta variant, the market was anticipating the RBA to announce the holding back of their QE tapering plan that was made during the previous meeting. However, the central bank stuck to its tapering plan of A$4 billion per week that will run from early September to at least mid-November. RBA downplayed impact of virus outbreaks on economic recovery. Although the RBA decided to stick with its QE tapering plan, it did acknowledge that the recent virus outbreaks are “interrupting the recovery and GDP is expected to decline in the September quarter”. Nonetheless, the central bank is confident that the Australian economy will rebound quickly after getting hit by the outbreaks as justified by previous occurrences. Impact on the Australian dollar. The Australian dollar strengthened as a result of the RBA sticking with their QE tapering plan.
by GH_Lee
AUDUSD bulls attack monthly hurdle on hawkish RBAThe Reserve Bank of Australia’s (RBA) keeping of September tapering on the table, despite covid woes at home, offered over 40 pips of immediate upside to the AUD/USD pair on the announcement. However, the quote remained below a one-month-old horizontal hurdle surrounding 0.7400–7410 and seems to ease of late. Although firmer RSI and RBA’s hawkish title favor AUD/USD bulls to cross the 0.7410 hurdle, 200-SMA near 0.7455-60 adds to the upside barriers before directing the quote to the mid-July top near the 0.7500 round figure. In a case where the quote steps back from the stated resistance, as it did the last Thursday, 0.7350 may return to the charts. However, any further weakness of the pair will be challenged by a two-week-old rising support line near 0.7330. If at all the AUD/USD bears dominate past 0.7330, the yearly bottom surrounding 0.7290 will be the key before direct the quote towards the October 2020 tops surrounding 0.7245.
Short
by MTradingGlobal
AUDUSD again crosses seven-week-old hurdle on RBA movesDespite pouring cold water on the face of monetary policy adjustment hopes, the Reserve Bank of Australia (RBA) manages to keep AUDUSD at the front of the G10 gainers. The Aussie central bank refrained from widely teased yields targets while also signaling a plan for further bond purchases during Tuesday’s monetary policy meeting. However, downbeat US dollar and hawkish comments from Governor Philip Lowe back another move beyond the falling trend line resistance, previous support, from mid-May after failing to stay beyond the same during late June’s upswing. Given the bullish MACD and RSI recovery, not to forget the 200-DMA breakout, buyers are likely to overcome the June 25 top surrounding 0.7615 during the latest run-up. Though, early June lows near 0.7645 will test the AUDUSD bulls afterward. Meanwhile, failures to stay past 0.7570 confluence comprising 200-day SMA and the stated trend line, will recall the AUDUSD sellers targeting the 0.7500 round figure. However, bears will again be questioned by a falling trend line from early February, near 0.7475, during any further weakness past 0.7500. It should be observed that the pair’s bearish trend remains in play despite the latest recovery moves.
Long
by MTradingGlobal
RBA where are YOU?So far the sudden creep up in the Australian 3 year yield has gone unnoticed. But it has jumped massively in the last two weeks from ​0.07% to 0.26% For months the RBA has kept the rate under 0.10%. However, this time it has left the rate unchecked. According to Michael West, this is the RBA testing the market. The three year rate is the rate that Banks use to lend to home owners and this is about taking the heat out of the property in an election year. www.michaelwest.com.au However, in it's just published minutes (1 June) the bank has confirmed its decision of " a target of around 0.1 per cent for the yield on the 3-year Australian Government bond" So is this a shorting opp? With the rates about to get squashed. Let's see.
TVC:AU03Y
by majicktrader
3
Aussie starts week higher, RBA decision nextThe Australian dollar is in positive territory on Monday. In the European session, AUD/USD is trading at 0.7733, up 0.32% on the day. The week started out on a sour note, as inflation fell in May. The Melbourne Institute (MI) Inflation Gauge, a monthly release, fell 0.2% in May, marking its first decline in seven months. With major economies showing stronger growth in the post-Covid era, central bank officials are keeping a close eye on inflation, as higher inflation could prod the central banks to tighten policy sooner rather than later. The MI release is just one reading, but if upcoming inflation data shows that inflation is not moving higher, then the RBA will not be under pressure to scale back its QE program. A taper by the RBA (or even a hint of a taper) would be bullish for the Australian dollar. The RBA holds its monthly policy meeting on Tuesday (1:30 GMT). The bank is expected to maintain policy settings and keep interest rates at a record low of 0.10%. The economy is performing well, but the recent outbreak of Covid in Melbourne and subsequent lockdown is a reminder that Covid has not yet been defeated. At the same time, economies are reopening as Covid recedes, and some central banks have become more hawkish in response. The Bank of Canada recently tapered its QE programme, and the Reserve Bank of New Zealand surprised the markets last week when it signalled the potential of a rate hike in the second half of 2022. The RBA has remained in dovish mode, stating that it has no plans to raise rates prior to 2024. Still, the RBA acknowledged the strong Australian recovery in its quarterly update earlier in May, and if the economic data continues to point upward, the bank may have to change its timeline for a rate change. Meanwhile, the bank's commitment to remain dovish has kept the Aussie from rising. AUD/USD is putting pressure on resistance at 0.7777. Above, there is resistance at 0.7846. On the downside, there are support levels at 0.7658 and 0.7608
by OANDA
Aussie slides on soft consumer confidenceThe Australian dollar has reversed directions on Wednesday and recorded considerable losses. In the European session, AUD/USD is trading at 0.7750, down 0.52% on the day. Investors gave the Aussie a thumbs down on Wednesday after Westpac Consumer Sentiment fell 4.8% in May. The trend of improving consumer confidence over the past three months was broken. Still, a review of the Westpac report shows a "glass half full" approach, as the report notes that the index dropped from 118.8 to 113.1, its second-highest print since April 2010. The RBA will hold a policy meeting on June 1, and the central bank will announce its plans for Yield Curve Control (YCC) and QE. The Westpac report says that the bank remains committed to monetary stimulus and this means that QE will be extended for a further A$100 billion in September, and YCC policy will shift from April 2024 to November 2o24. The bank has repeatedly said that it has no plans to tighten policy prior to 2024. The market will be treated to a dump of Australian data on Thursday. Consumer Inflation Expectations is first up (1:00 GMT), with a consensus of 3.6%, up from 3.2%. This indicator is closely watched as inflation expectations can translate into actual inflation, so a strong gain would be a signal that inflationary pressures are growing. The highlight will be Employment Change (1:30 GMT), with a small gain of 15.0 thousand expected, down from 70.7 thousand. Australia also releases Manufacturing and Services PMIs (23:00 PMI). Both sectors are in good shape, a testament to the strong Australian economy. Manufacturing PMI is projected at 59.8 and Services at 58.9, which are well into expansionary territory. The 50-level separates contraction from expansion. AUD/USD faces resistance at 0.7887 and 0.7990. On the downside, there are support levels at 0.7684 and 0.7584.
by OANDA
AUDUSD: Weekly ForecastThe Aussie will be highly watched this week as RBA releases its monetary policy as well as employment data. AUDUSD was somewhat bearish last week as it fell but found support and recovered half of the loss. The rebound came from multiple technical support such as the bottom of a rising channel as well as moving averages. Otherwise, AUDUSD is technically a bullish pair for more than a year now and climbing very much like the US stock indices. That's mostly contributed by rising inflation which causes commodity prices to go up and Aussie, as most should already know, is a commodity currency. While we can continue to look for buying opportunities near the support, the upside is limited as the market is about to reach the equilibrium level slightly above 0.80. Price of interest: Resistance: 0.7890, 0.8080 (equilibrium) Support: 0.7730 (bottom of channel), 0.7690 (equilibrium)
Long
by AlgoVenture
13
AUD - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS: BULLISH 1. Developments surrounding the global risk outlook. As a high-beta currency, AUD has benefited from the market's improving risk outlook over recent months as participants moved out of safe-havens and into riskier, higher-yielding assets. Also, as a pro-cyclical currency, the AUD enjoyed upside alongside other cyclical assets after moving into an early post-recession recovery phase with expectations of global synchronized recovery. Even though the risks remain surrounding the virus and thus global economic outlook, the success of the global vaccination roll out should prove supportive for the AUD. 2. The Monetary Policy outlook for the RBA The RBA continues to rule out NIRP, and with the Cash Rate at a record low of 0.10%, further reductions appear unlikely. Further easing remains a possibility through QE and the bank has stressed its commitment to purchase as many bonds as necessary to reach and maintain their 3-year yield curve control target of 0.10%. The possibility of macroprudential policies to try and curb a very hot housing market is a possible risk. 3. The country’s economic and health developments Australia’s successful handling of the pandemic is one of the reasons why the economy was able to see a stronger economic recovery than initially expected. On the economic front, China’s recovery remains robust, and as Australia’s biggest export destination (39.1% of total exports) their demand for Australian commodities has seen a surge in commodity prices, especially Iron (Australia’s biggest commodity export). If the virus remains under control, and China’s recovery and demand for commodities remains strong the outlook for the domestic economy remains positive.
by thunderpips
AUDCAD Possible Short SetupAUDCAD is resting in the previous support zone of 0.9518-0.9536. After breaking quickly through this zone by slightly over 60 pips, price slowly made its way back. The 4H chart shows a downward bias as the 20, 50, and 200 period MAs are crossing down. Furthermore, price is resting right at 20 period MA, a great place for a potential reversal downward. I was hoping for a super clean retest here where price bounces off the 50 period or 200 period MA right at my retest zone. However, it doesn't look like we're getting that. As such, I will be taking this trade with a 1% risk instead of my normal 2%. I will personally wait to enter this trade until I see a clear bearish reversal pattern on the 1H chart or some lower lows and lower highs on the 15m. Furthermore, the RBA will be releasing their Rate Statement and Chast Rate tonight at 12:30am Eastern. That makes this a risky entry. However, it is epxected that the cash rate will remain the same through 2023 or so. They may make some changes to QE and curve control, among other things. Ideally, we can get a clean entry before the RBA data is released. Patience is the name of the game, so I will be watching this pair for a solid entry.
Short
by MRobertsTrading
USD leads FX majors while AUD trades mixed following RBAHeading into today's european trading session, the risk tone is leaning risk-on with asia pacific indices positive, yields firmer, measures of volatility subdued and safe-havens weaker. In the FX complex,the positive risk tone sees CHF fall to the bottom of the pack, with JPY also pressured across the board. Consequently, EURCHF has reclaimed the 1.1000 handle as USDCHF looks for a test of yestrday's high. Indeed, USD remains well supported across the board, leading the FX majors to the upside with DXY trading back above the 91.00 handle and looking to pare all of yesterday's weakness. Commenting on USD, Reuters noted: "The dollar drifted higher in the Asia session on Tuesday, pausing a monthlong decline as investors weigh whether a roaring U.S. economic recovery may force interest rates higher and are looking to upcoming economic data and policy speeches for clues." Another currency of note is AUD following the RBA's May policy announcement. As expected, monetary policy remained unchanged with the cash rate and 3yr yield target at 0.10%. The response from analysts has been mixed, with the focus failing on sharp revisions higher to the central bank's economic forecasts, but still no policy tightening expected until at least 2024. Consequently, AUD trades mixed against its major peers. Looking to the sessions ahead, the only data of note in today's european trading session will be the UK's manufacturing PMI report which is expected to be confirmed at a healthy 60.7.
TVC:DXY
by thunderpips
2
Aussie steadies after slide, RBA nextThe Australian dollar is steady in the Monday session. In European trade, AUD/USD is trading at 0.7722, up 0.14%. The US dollar showed some broad strength on Friday, and AUD/USD fell 0.70% and briefly fell below the 0.77 level. The greenback was supported by inflows from international investors who snapped up US Treasuries in month-end rebalancing flows. Strong US numbers on Friday also gave the US dollar a boost. The Core PCE Price Index, which is considered the Federal Reserve's preferred inflation gauge, rose to 0.4% in March, up from 0.1% beforehand. This is another indication of inflationary pressures, as the US economy continues to sprint at a fast pace. The Fed has stated more than once that any spike in inflation will be temporary, but it's not at all clear that the market has bought into this stance. If inflation numbers continue to rise in the coming months, the Fed may have to acknowledge that higher inflation levels are not a passing event. On Friday, Fed Governor Robert Kaplan, who is not a voting member, said straight out the Fed needs to be talking about tapering its asset-purchase program. The Fed has insisted that it needs to keep its foot to the pedal as the economy continues to recover, but there's a good chance that other Fed members agree with Kaplan. The US economy has been reeling off impressive numbers, and the April nonfarm payroll report is expected in at 975 thousand. A print above the one million mark is certainly achievable and would provide ammunition to the view that the Fed should review its current policy. The RBA is facing a similar economic picture to that of the Fed - a rapidly improving economy and strong growth. Like the Fed, the RBA has implemented a highly accommodative policy in order to support the economy's recovery from the Covid pandemic. The central bank holds its policy meeting on Tuesday (4:30 GMT), and the bank is expected to maintain interest rates at 0.10% and its QE programme of A$100 billion. Unless there is a surprise announcement, I would expect the RBA meeting to be a non-event for the Australian dollar. On the upside, 0.7787 is the next resistance line. Above, there is resistance at 0.7864. On the downside, there are support levels at 0.7665 and 0.7620
by OANDA
The Reserve Bank of Australia keeps interest rates on holdThe Reserve Bank of Australia keeps interest rates on hold, at the historically low level of 0.1 percent, it was expected to last until at least 2024. MM Analysis 1. Monetary Policy - Keeps interest rates on hold, at 0.1 percent - The initial $100 billion government bond purchase program is almost complete and the second $100 billion program will commence next week. 2. Economic forecast - The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven. - The economic recovery in Australia is well under way and is stronger than had been expected. - CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions but inflation is expected to remain below 2 per cent over the next few years. 3. Forward Guidance - The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range, it does not expect these conditions to be met until 2024 at the earliest. 4. Conclusion - The RBA statement meets the market expectation, although employment rate has returned to the pre Covid-19 level, when the salary subsidy policy expires, the employment market is still uncerntain. The Bank of Australia has once again stated that it will not raise interest rates before 2024. In conclusion, this statement maintains dovishness.
by MacroMicro_Global
AUD - CENTRAL BANK ANALYSISObjective: The RBA's objectives are to contribute to (a) the stability of the currency; (b) themaintenance of full employment; and (c)the economic prosperity and welfare of the people of Australia. Stability is widely acknowledged through the RBA's inflation target of 2-3%. As of Q4, inflation in Australia stands at 0.9%; while GDP for Q3 printed at -3.8% Y/Y and -3.3% Q/Q. For February, the Unemployment Rate fell to 5.8% from January's 6.4% with Employment Change printing at 88.7K with full-time employment printing at 89.1K. Situation: At their March meeting, the RBA kept its Cash Rate and 3-year yield target at a record low of 0.10%. However, the central bank reaffirmed its commitment to maintaining highly supportive monetary conditions until its goals are reached and it will not increase the Cash Rate until inflation is sustainable at 2-3% target. Additionally, the RBA stated it is prepared to make further adjustments to its bond buying program in response to market conditions and it does not expect a tight labour market and high wage growth until 2024 at the earliest.
by thunderpips
8
Markets await RBA decisionThe Australian dollar has started the week with slight gains. Currently, the pair is trading at 0.7626, up 0.25% on the day. Friday's Nonfarm payrolls was expected to be strong, and NFP delivered big, with a read of 916 thousand, up from 379 thousand a month earlier. This figure easily beat the forecast of 652 thousand. With the US recovery gaining traction and the Biden administration pouring trillions of dollars into the economy, we can expect upcoming NFP prints to be above the one million level. That is, if the vaccination rollout continues as planned. The US dollar didn't show much reaction to the blowout release, and AUD/USD was muted on Friday. Overshadowed by the sparkling NFP report was a drop in the unemployment rate, which dropped from 6.2% to 6.0%, matching the forecast. Unemployment continues to fall and this was the lowest level since April 2020, prior the huge jump in unemployment due to the Covid pandemic. The RBA holds its monthly policy meeting on Tuesday (4:30 GMT). The meeting is expected to be uneventful, with the central bank widely expected to maintain interest rate and interest rate and yield curve targets at 0.1%. The bank's QE programme of A$100 billion is set to expire but will be immediately renewed for a six-month period.  The RBA has been in dovish mode, stating that it expects to maintain its current stance until 2024, when inflation is projected to reach the bank's target of 2-3%. However, Australia's economy has been recovering rapidly and it's entirely possible that inflation could reach this target well before 2024, in which case we could see rate hikes ahead of the RBA's schedule.  AUD/USD faces resistance at 0.7675. Above, there is resistance at 0.7735 The first line of support is at 0.7543, followed by support at 0.7471.
by OANDA
1
AUD pauses after mini-rallyThe Australian dollar is showing little movement in the Wednesday session. Currently, the pair is trading at 0.7706, down 0.08% on the day. Australia's economy has recovered from the Covid-induced downturn more quickly than expected. The country has contained Covid quite well, and global demand for Australian exports is growing. The impressive economic recovery has led to speculation that the RBA could raise interest rates next year or early 2023. The central bank has trimmed rates to a record low of 0.10% and has a QE program of A$200 billion currently in place. RBA Governor Lowe sought to dampen speculation over a rate hike, saying that there would be no hikes before wage growth lifted inflation to the bank's target of 2-3%. Lowe said that this would require wage growth, currently at 1.4%, to climb above 3 per cent. In order for that to happen, unemployment would need to fall to 4%, down from the current 6.4%. Although the RBA could choose to raise rates even if these targets were not met, his comments served notice to the markets that higher rates remain a long, long way off. Lowe was clear in this message, saying in the bank's assessment, "the cash rate is very likely to remain at its current level until at least 2024.” Sandwiched in between Lowe's comments were solid economic releases, reiterating that the economy is pointed in the right direction. The NAB Business Confidence index rose from 10 to 16 in February, its highest level since 2010. As well, Westpac Consumer Sentiment rose to 111.8 in March, up from 109.1 beforehand. The index is now just shy of the December read of 112.0, which was a 10 year high. AUD/USD faces resistance at 0.7805, followed by resistance at 0.7930. On the downside, there is support at 0.7589. If this line fails, the pair could fall sharply, with the next support level at 0.7498
by OANDA
AUD steady as retail sales hit expectationsThe Australian dollar has recorded slight gains in the Thursday session. Currently, the pair is trading at 0.7790, up 0.23% on the day. Retail sales climbed 0.5% in January, which followed the December gain of 0.6%. These are by no means earth-shattering numbers, but the two consecutive gains are welcome news after back-to-back declines of around 4 per cent. The small gains point to consumer spending stabilizing and with the recovery gaining steam, we can expect better numbers in the coming months.  It has been a busy week on the fundamental side, with a host of Australian indicators. The highlights have been the RBA policy meeting and a strong GDP report. The RBA left interest rates at the ultra-low level of 0.10%, but the rate statement was notable for its reference to the Australian dollar. The statement noted that the bank's current monetary policy had contributed "to a lower exchange rate than otherwise. The central bank has watched with apprehension as the Australian dollar has appreciated sharply against the US dollar, with the Aussie punching above the symbolic 80-line just last week. The RBA would like a lower exchange in order to maintain price stability and protect the critical export sector. GDP showed a strong gain of 3.1% in Q4, down slightly from 3.3% beforehand but well above the estimate of 2.5%. Finance Minister Josh Frydenberg commented that the economy was recovering more quickly than the government had anticipated, noting that the first time in recorded history that Australia has seen two consecutive quarters of economic growth of more than 3%”. Let's review the weekly support and resistance levels: AUD/USD faces resistance at 0.7910, followed by resistance at 0.8116. There is weak support at 0.7752, followed closely by support at 0.7728. The pair is trading around the 0.78 line, which is slightly above its multi-month ascending wedge support at 0.7750.
by OANDA
Inflation Rate Roundups Trade Safe - Trade Well Regards, Michael Harding 😎 Chief Technical Strategist @ LEFTURN Inc. RISK DISCLAIMER Information and opinions contained with this post are for educational purposes and do not constitute trading recommendations. Trading Forex on margin carries a high level of risk and may not be suitable for all investors. Before deciding to invest in Forex you should consider your knowledge, investment objectives, and your risk appetite. Only trade/invest with funds you can afford to lose.
TVC:DXY
by Michael_Harding
2