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Reservebankofaustralia

AUDUSD Exposed to Pivotal Support in the RBA AftermathThe Reserve Bank of Australia raised its 2024 inflation forecast on Tuesday and appeared more concerned around achieving its 2-3% target. Despite considering the case for a hike, policymakers decided to hold rates at 4.35% for fourth straight meeting. The Aussie reacted lower, as markets likely expected a more hawkish language from the RBA, given the upgraded CPI projections. At the same time, inflation persistence in the US has turned the Fed cautious towards lowering rates, pedaling the higher-for-longer narrative. Markets have pushed back the timing of such moves to beyond summer and price in just 25-50 bps worth of cuts this year. AUDUSD is now exposed to the critical confluence of supports, provided by the EMA200 and the 38.2% Fibonacci of the April low/May high advance. Daily closes below it would shift immediate bias to the downside and open the door to further losses towards 0.6464. However, the policy differential is unlikely to fuel sustained weakness and if anything, it could become supportive. The Fed is still projected to cut this year, whereas markets have priced out such moves by the RBA for around a year more and Governor Bullock did not rule out hikes. Above the EMA200 and the 38.2% Fibonacci, bulls are in control with the ability to set higher highs. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (trading as “FXCM” or “FXCM EU”), previously FXCM EU Ltd (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
Long
by FXCM
AUDUSD Weekly Forecast | 29th May 2023Fundamental Backdrop RBA Gov Lowe speaking on Wednesday. He repeated that the RBA would have to resort to the only “blunt instrument” at its disposal, which was to keep increasing interest rates. Previously an increase to the interest rates only caused the AUD to weaken further. Technical Confluences Near-term resistance level at 0.65700 Near-term support level at 0.65200 Next support at 0.64150 Idea This Wednesday if he is dovish on his speech towards raising more interest rates in the future, we could see the AUD head towards the next support level at 0.64150. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Short
by OlympusLab
A Kangaroo Hop!Things seem to be going well down under. With Iron Ore prices jumping close to 8% last week, Australia, the largest exporter of the raw material stands to benefit greatly. In 2021, Iron Ore exports totaled close to US$120 billion. This contributes greatly to the demand side pressure on the Australian dollar. Looking at the charts, the AUDUSD pair is currently trading at the bottom of the channel support on the 1-hr time frame. With the 200-period moving average right below current levels, we think downside resistance will prove strong and prices will bounce off the bottom of the rising channel quickly. Stay tuned to the Reserve Bank of Australia’s meeting tomorrow and time your entry there! Assuming no surprises and the technical supports are intact, we favor the long side for the AUDUSD pair. Entry at 0.7190, stop below 0.712. Targets are 0.7346 and 0.7460. Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
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CME:6A1!Long
by inspirante
8
A Rate Hike Before 2024? (04 November 2021)The Reserve Bank of Australia (RBA) concluded its monetary policy meeting on Tuesday with no change in its weekly A$4 billion bond purchases, aka quantitative easing (QE), while holding interest rate unchanged at 0.10%. What has changed during this meeting is the ending of the central bank’s yield curve control (YCC). Dropping the YCC It all began when the RBA carried out an unscheduled purchase of A$1 billion of April 2024 Australian government bond back in 22 October in an attempt to tame the rising yield, bringing it back down to the central bank’s 0.10% target. Towards the end of October, yield on the April 2024 bond sky-rocketed to 0.75%, the biggest monthly increase since 1994. This time round however, the RBA did not attempt to bring down the yield to its target through any purchase of bonds, leaving the market to speculate that the RBA may be discontinuing its YCC during its November meeting. The decision to end the YCC “reflects the improvement in the economy and the earlier-than-expected progress towards the inflation target” as explained in the rate statement. With the rise of interest rates from other markets, the central bank felt that the efficacy of the YCC has vanished. An earlier rate hike timeline The RBA has repeatedly emphasized that an interest rate hike will be considered only when inflation is sustainably achieved within its 2-3% target. Prior to the November’s meeting, the central bank forecasts that this condition “will not be met before 2024”. However, it has revised this forecast somewhat optimistically in yesterday’s statement, indicating that: “The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2½ per cent at the end of 2023 and for only a gradual increase in wages growth.” With this revision, the RBA is now implying the possibility of inflation coming into the 2-3% targeted range at the end of 2023. This means it is fair game for the central bank to carry forward its rate hike timeline. Overall positive economic projections The RBA’s quarterly economic projections for 2022 and 2023 have underwent positive revisions. Specifically, inflation projection has been revised upwards which is good as it is the main deciding factor of a rate hike from the central bank. The RBA now expects inflation to fall within their 2-3% target for 2022 and 2023. For year 2022, GDP: 5.50% (a little over 4.00%) Unemployment: 4.25% (4.25%) CPI Inflation: 2.25% (1.75%) For year 2023, GDP: 2.50% (2.50%) Unemployment: 4.00% (4.00%) CPI Inflation: 2.50% (2.25%) *Figures shown in parentheses refers to projections from August 2021
by GH_Lee
2
Dovish Tapering Locks In QE (08 September 2021)The dovish tapering decision. During its monetary policy decision yesterday, the Reserve Bank of Australia (RBA) kept its cash rate unchanged at 0.10%. As promised, the central bank proceeded with its quantitative easing (QE) tapering plan announced back in the July’s meeting. What came as a surprise is the duration of the new round of QE. Previously, the RBA opted for a two-month QE duration. But during the announcement yesterday, the central bank decided to extend the duration by five months instead. Thus, the tapered A$4 billion QE will run from September until at least February 2022. As a result, the Australian dollar strengthened for a brief period of time before weakening across the board, reflecting the dovishness as a result of the extension of the QE duration. Delta variant still a concern to the RBA. Despite RBA Governor Lowe saying previously that fiscal policy will prove to be more effective than monetary policy in providing aid at the moment, this does not deter the central bank from making a more cautious decision. As explained in the rate statement, the RBA’s decision to extend the QE duration “reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak”. Rate hike remains out of sight. As with the previous meetings, the RBA continues to reiterate that its cash rate will not be increased until inflation falls within the 2-3% target range and this condition will not be met before 2024 based on their current projection.
by GH_Lee
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
Monetary Policy Meeting: BoE & RBALast week, the Bank of England and the Reserve Bank of Australia held their first monetary policy meeting for this year. In this article, we will look at the takeaway from the meetings. BoE put to rest speculation on adoption of negative interest rate. The third national lockdown imposed on England early last month led to the speculation that the Bank of England (BoE) is likely going to take interest rate to the negative level to cushion the negative impact on the UK economy. However, the speculation has been put to rest by the central bank during its monetary policy meeting last week. In the monetary policy minutes, the BoE stated that it “did not wish to send any signal that it intended to set a negative Bank Rate at some point in the future”. Furthermore, the central bank highlighted that the implementation of negative interest rate will require preparatory work to be carried out six months before its implementation. In an effort to control the situation, BoE Governor Andrew Bailey advised the public not to speculate any future actions that the central bank may take. On the economic recovery side of things, the BoE expects the UK economy to contract by 4% during the first quarter of 2021. However, the central bank is optimistic that the economy will recover fast this year with UK’s speedy vaccination programme, expecting the economy to return to the pre-pandemic level by the first quarter of 2022. As a result, the BoE revised down its economic growth forecast for 2021 from 7.25% to 5% but revised up its forecast for 2022 from 6.25% to 7.25%. Finally, the central bank kept its interest rate and monetary policy unchanged. RBA carries out more monetary policy easing. Unlike the Bank of England, its Australian counterpart took a more aggressive approach towards monetary easing. During the monetary policy meeting last week, the Reserve Bank of Australia (RBA) decided to purchase additional $100 billion of government bonds once the current bond purchase program ends in mid-April. The main reason for the central bank to carry out more easing was due to subdued wage and price pressures. The RBA highlighted that the latest annual inflation rate of 0.9% is still far from the central bank’s targeted level of 2-3% while wages are increasing at the slowest rate ever. The central bank expects both inflation and wages to pick up gradually but will still remain below 2 per cent over the next two years. Despite the subdued wage and price pressures, the RBA also acknowledged that economic recovery in Australia has exceeded their expectation. The jobs market has been performing well, indicating strong employment growth and continued decline in unemployment rate. Consumer spending has also been strong while an increase in the number of deferred loan repayments have been made. Thus, the central bank is now expecting the country’s economic growth to return to the end-2019 level by mid-2021 as opposed to the previous expectation of end-2021. Lastly, the RBA also expect interest rate to remain at the current level of 0.10% until wages growth is higher than the current level and its inflation target range of 2-3% has been met, which the central bank foresees it to happen only in 2024 at the earliest.
ICEUS:DXY
by JinDao_Tai