AUD: Australian Dollar is growing due to the positive external news

At the Forex currency market the Australian Dollar rate continues to grow on Thursday, following optimistic sentiments of the investors at the global capital markets.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to go down, giving a pair sell signal, while volumes are minimal. Stochastic Oscillator is going up in the neutral zone, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 1.0600 the pair will go to 1.0620 and 1.0650. If upward breakdown does not take place the pair will consolidate at the current levels. There is high possibility that aggressive buyers will be back for the pair.

Representative of the Reserve Bank of Australia Mr. Batellino noted today that growth of the Australian Dollar is a direct reflection of the situation in the global economy. “It is difficult to change this situation, so some sectors of the economy will suffer from high exchange rate of the currency” –he stressed. However, he clarified that growth in inflationary pressure is naturall amid recovery of the global economy.

Batellino also reported that increase in savings is positive for the economy because high level of savings in the households does not affect consumption. In addition, the rise in income will enable to rise spending.

It became known today that leading indicators index in Australia increased by 1.5% m/m in March, to the level of 284.5 points, while annual gain is assessed at 5.3%. Index of coincident indicators rose by 0.7% (+2.0% y/y) in March.

Westpac believes that growth rate of the leading indicators, which helps to assess economic prospects for the next 3-6 months, has stabilized, and shows moderate rate of recovery in the Australian economy.  “The results of the first half of the year might be not the best, due to slowdown in the pace of development in QI, caused by the weak external sector and wholesale inventories-   pointed Westpac.

The minutes of the Reserve Bank of Australia meeting of 3 May which were made public earlier stated that growing Australian Dollar has assisted to curb inflation; while interest rate remains at the previous level of 4.75% per annum. 

The RBA admits that if economic situation will develop according to expectations, interest rate increase will become a necessity.
The minutes of the meeting were vague when describing the state of the labor market in the country; it is not clear yet in which way the increasing wages will impact on the tightening of the labor market conditions.  At the same time sentiments of households and labour market will be important factors for determining dynamics of inflation in the coming years.

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