Australian Dollar, AUD / USD, RBA, NFP, Technical Analysis – Market Warning
- Australian dollar increased as the RBA left alone its plan to reduce the use of assets
- The rather firm outlook for the medium term overshadows short-term risks
- AUD / USD when testing a 20-day simple moving average, watch to see if it is broken
The Australian dollar rose after the Reserve Bank of Australia issued its last monetary policy announcement in August. As expected, the central bank left the target interest rate on cash at 0.10 percent. Investors were likely to be motivated to buy Australian dollars by the RBA leaving alone its plan to reduce its weekly asset purchases to $ 4 billion in September from the current rate of $ 5 billion.
Since the interest rate decision in July, the closures have damaged local growth prospects due to the emergence of the Delta Covid-19 option in parts of Australia. This pushed down Australian government bond yields as traders rated the more monetary central bank. Expectations that the central bank may change the July decision to reduce weekly asset purchases this year also increased in the light of these developments.
Additional RBA highlights (Bloomberg comment):
- The outlook for the Australian economy is uncertain in the coming months
- Growth of just over 4% in 2022, then around 2.5% in 2023
- The economic and health situation is taken into account when formulating policy perspectives
- Strong economic growth is expected next year
All in all, the central bank seemed fairly confident about the long-term economic outlook. Although there have been closures, the RBA noted that past experience has shown that “the economy is recovering quickly”. GDP is expected to decline in the third quarter. Despite some downward changes in the outlook, the RBA seems firmly on track to offer some relief to the Australian dollar.
The way forward is still uncertain. China, Australia’s largest trading partner, has forced millions to close due to the rise in Covid cases. If growth slows in the world’s second largest economy, the pain could be felt in Australia. AUD /USD can find relief if a softer-than-expected U.S. non-farm payroll report further moods Narrowing food stakes. However, a large absence may lead to the avoidance of AUD-negative risk.
5-minute graph of the AUD / USD RBA response
Australian dollar technical analysis
From a technical point of view, however, the broader trend in AUD / USD seems to point to a downside. A sharp intersection of the 50- and 200-day moving average (SMA) indicates a decline. Monitor the 20-day SMA closely in the near future. A break above this line with the fastener can open the door higher in a short time. Otherwise, a key support under 0.7290 shows a 78.6% Fibonacci retracement at 0.7209.
AUD / USD daily schedule
– Written by Daniel Dubrovsky, Strategist For DailyFX.com
Use the or comments section below to contact Daniel @ddubrovskyFX Twitter