AUD: Australian Dollar has a chance to resume growth

At the Forex currency market the Australian Dollar rate is traded upward on Wednesday in response to the improvement in investor sentiments at the global capital markets.

Forex forecast: MACD indicator for the pair AUD/USD is in the positive area, giving a buy signal. Stochastic Oscillator is going down in the neutral zone, giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0390, the pair will go to 1.0400 and 1.0430. If upnward breakdown does not take place, the pair will consolidate at the current levels.

Yesterday, Reserve Bank of Australia announced reduction in the interest rate up to 4.50% per annum, by 25 basis points, which in general agreed with expectations.

In the follow-up comments the RBA said that inflation is being curbed now due to the high rate of the currency and low demand of population; regulator expects that in 2012 inflation will be at the level of 2-3%. The Bank also emphasized deterioration of the conditions in the labour market and decrease in prices for the raw materials. Concern about developments in Eurozone is still high, and growth rate of the national economy seems to be moderate.

According to RBA, lending rates are now slightly higher than the average level, even despite softening of general conditions. Note also, that RBA hinted at further lowering of the rates if general conditions do not improve. Unemployment rate in Australia declined to 5.2% in September versus the level of 5.3% in August. This data demonstrated dynamics for the first time since this March. Employment rate rose by 20.4 thousand last month, while analytics expected the growth of not more than 10 thousand. As noted in the Bureau of Statistics in Sydney, coal mining companies hire staff to meet demand for raw materials from China and India.

Business confidence NAB in Q3 amounted -4 points while in Q3; while the index had been at the level of +5 points in Q2. According to observers’ estimates the level of employment, sales and corporate profit in the country has dropped considerably. Business conditions in the three- month term amounted +5 points against +10 points previously and amounted to level of +18 points on annual basis against prior +27 points. Sharp decline in the indicator kicked off a quarter earlier, is still going on.

We would remind that according to the data released earlier, CPI in Australia rose by 0.6% q/q (+3.5% y/y) in Q3 against the forecast of growth by 0.5% on quarterly basis. At the same time, inflation increased by 0.9% on quarterly basis in Q2; slowdown in CPI is obvious. It is worth noting that seasonally-weighted CPI rose by 0.3% (it is being tracked by RBA). Growth of inflation has been the lowest since Q3 in 1997. The data released earlier showed that consumer confidence WESTPAC in Australia rose by 0.4% m/m, to the level of 97.2 points in October. Monetary politician, Mr. Evans noted today that it is possible that the rate might go down in November, since low growth of the index proves general pessimistic sentiment.