AUD: Australian Dollar is sold out at the beginning of the week
The Australian Dollar rate is sold out at the Forex currency market on Monday, since investors are moving away from high-risk positions because external background is not the most optimistic at the beginning of the week.
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 low. Stochastic Oscillator is going down in the neutral zone, giving a pair sell signal.
Forex recommendations: in case of breakdown at the level of 1.0530 the pair will go to 1.0515 ? 1.0500. If downward breakdown does not take place, the pair will consolidate at the current levels.
Australian statistics will not present important macro-statistics this week; therefore external background will continue to act as a driver for the players.
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.
Statistics released earlier was mixed: trade balance in Australia rose to A$1.74 billion in March against the level of -A$0.08 billion in February. Moody's Investors Service agency gave positive assessment to the data; according to observers of the agency, resolution of the authorities to revert the balance of the state budget to the zone of surplus is well-founded and such attitude supports credit rating of the country, which is at Aaa. Index of wage costs in Australia rose by 0.8% on quarterly basis (+3.8% y/y) in QI, while the forecast of growth was 1.1% q/q. The market had been waiting for the index as earlier it had almost reached the significant level of 4% y/y. Now the concern of investors about the discrepancy between labor cost and index of inflation will lessen.
However, the data may well affect the decision of the RBA in June, forcing the regulator to extend the pause in the interest rate increase.
Note: that the level of CPI in Australia rose by 1.6% on quarterly basis (+3.3% y/y) in QI.
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