- The Reserve Bank of Australia could upwardly review its macroeconomic projections.
- Policymakers will likely maintain the door open for additional QE if needed.
- AUD/USD trades within familiar levels needs to break above 0.7820 to turn bullish.
The Reserve Bank of Australia is having a monetary policy on Tuesday, but no changes to the current policy are expected this time. The central bank has clarified multiple times that they won’t adjust the current policy until inflation is “sustainably within the 2% to 3% target range.” According to the latest available data, inflation rose at 1.1% annual pace in the first quarter of the year.
Inflation, employment and growth
For inflation to reach such levels, wages growth will have to substantially increase, and that would require a tighter labour market. Back in March, the central bank stated that it would not raise interest rates at least until 2024 when it sees a clearer recovery on both legs of the central bank’s mandate.
However, there’s still hope. Economic figures coming from the country have been improving, hinting the RBA may have to review its outlooks. The latest forecasts indicate that Australian policymakers expect the unemployment rate to fall to 6% by the end of 2021 and 5.5% by the end of 2022, while the Gross Domestic Product was foreseen expanding by 4% this year and 3.5% in 2020.
Investors are hoping for an upward review in the overall outlook, but also for policymakers to retain a certain cautious stance, and repeat that they are ready to add quantitative easing if it’s needed. For sure, the latest data suggest that Australian central bankers could be much more confident on what's next for the local economy. Still, no fireworks are to be expected.
AUD/USD possible scenarios
The AUD/USD pair up ahead of the event, as investors are in a risk-on mood. Stocks are up after US data confirmed substantial growth in the country, despite missing the market’s expectations. From a technical point of view, the pair is trading between 0.77 and 0.78, lacking clear directional strength and currently recovering from a daily low of 0.7705.
The near-term picture suggests that the pair may accelerate its advance once above 0.7770, the immediate resistance level, although it would need to settle above 0.7820 to hint at further gains ahead. The main support is 0.7690.
Worth noting that the pair will continue to depend on the market’s sentiment. Higher equities and base metal prices will likely support a bullish extension, while a dismal mood will end up benefiting the greenback.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.