AUD: Australian Dollar likes the RBA’s position

At the Forex currency market the Australian Dollar rate grows up steadily after yesterday’s sales.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, however it started to decline, and is prepared to form a pair sell signal. Stochastic Oscillator pushed away from the oversold zone and begins to rise in the neutral zone, giving a pair buy signal.   

Forex recommendations: in case of breakdown at the level of 1.0710, the levels of 1.0730 and 1.0750 will become the target of purchase. If a steady upward breakdown does not take place, the pair will consolidate close to the current levels.

Today, the Reserve bank of Australia outlined its vision of the prospects for the national economy. Thus, next year the RBA will announce measures to reduce government costs in order to restore budget surplus. If the program is implemented it will help Australia to maintain GDP growth, which has been observed over the past 20 years and to curb inflation.  

On 10 May Finance Minister Swan will announce details of the program. The situation is still complicated with respect to the interest rate: most probable that Prime Minister Julia Gillard will oppose the tightening of monetary policy, since the rise in the rates will create additional obstacles for the RBA. However the RAB is also set to increase interest rate because the boom in the mining sector triggers the growth of inflation, although at the same time contributes to maintaining stability in the employment sector. 

Stress of the economists was caused by the data on the retail sales (-0.5% m/m against the growth by 0.8% in February): the indicator went down because sales in the department stores and super markets had been reduced. Interestingly that it is happening during long period of discounts in many stores.

According to the data released last week CPI in Australia increased by 1.6% on quarterly basis (+3.3% y/y) in QI. Therefore, inflation in the Green Continent has reached five-year highs; natural disasters have triggered the rise in costs for food and other consumption goods for people. In addition, commodity prices at the global markets remain high, because tension in the Middle East does not abate. RBA expects that net CPI will reach 3% against predicted 2.75% by the end of this year.

As it was made public earlier, index of import prices increased by 0.9% on quarterly basis in QI. Index of leading indicators rose by 4.7% y/y in March against the rise by 4.8% in February. It is a good result taking into account that the Reserve Bank of Australia keeps interest rate unchanged for a long time.

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