AUD: Australian Dollar is on sale at the beginning of the week

At the Forex currency market the Australian Dollar rate goes down on Monday, as investors are not interested in risks due to the surge of attention to the debt problems in Eurozone.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD and continues to go down, being ready to break through the signal line from top to bottom, and confirming a previous sell signal. Stochastic Oscillator is increasing in the neutral zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.0700 the pair will go to 1.0720 and 1.0750. If upward breakdown does not take place the pair will consolidate at the current levels. There is high possibility that aggressive sellers will be back for the pair.

Australian economic situation remains mostly unchanged; however a new week will bring a lot of new macro-statistics.

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.

Representative of the Reserve Bank of Australia Mr. Batellino noted yesterday 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 natural 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 mean that consumption will suffer. In addition, the rise in income will enable to increase spending.

It became known earlier 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, which was caused by weakness in external sector and wholesale inventories”, pointed Westpac.

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