RBA's Lowe: Interest rates are going to be low for quite a while yet

The Reserve Bank of Australia Governor Phillip Lowe is currently speaking on a panel at the Australian parliament's House of Representatives Standing Committee on Economics.

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Key comments

Says Australia in a much better place than most countries.
Says economic recovery started earlier and is stronger than we had expected.
Says many economic outcomes were better than our upside scenarios.
Says before increasing the cash rate, the board wants to see inflation sustainably within the 2 to 3 per cent target range.
Says RBA is committed to making further progress in reducing unemployment and having inflation return to the target range.
Says meeting this condition will require a tighter labour market and stronger wages growth than we are currently forecasting.
Says central scenario is for the upswing in the Australian economy to continue, with above-trend growth over the next couple of years.
Says difficult to determine exactly when this condition might be met, but, we do not expect it to be before 2024.
Says GDP is expected to increase by 3½ per cent over both this year and 2022.
Says interest rates are going to be low for quite a while yet.
Says expecting the level of GDP to return to its end-2019 level by the middle of this year, which is 6 to 12 months earlier than previously expected.
Says the board judged that it was in the "national interest" for the bank to continue with its bond purchases.
Says the RBA does not, and will not, directly finance governments.
Says in our central scenario, the unemployment rate continues to decline to reach 6 per cent by the end of this year and around 5¼ per cent by mid-2023.
Says a larger a$ appreciation would have occurred in the absence of the RBA's measures.
Says paying close attention to how households respond to the tapering of the fiscal and other support measures.
Says the housing market has been more resilient than expected and this has been helpful in terms of the overall economy.
Says we want to see lending standards remain strong.
Says we want to see lending standards remain strong; at present, there are few signs of deterioration in these standards.
Says at present, there are few signs of deterioration in these standards says watching the housing market closely.
Says very significant monetary support will need to be maintained in Australia for some time to come.
Says housing market has been more resilient than expected and this has been helpful in terms of the overall economy.
Says it will still be some years before inflation is sustainably consistent with the target and full employment is achieved.

AUD/USD technical analysis

The Australian dollar is not reacting to the comments in whole as the governor repeats that the value of the Aussie is expected to hang around the current level, 0.7600, for the foreseeable future.

Lowe has explained that monetary policy has narrowed in line with other nations rates which is counteracting the rise in commodity prices. 

Meanwhile, markets are waiting for the RBA to release the February Statement on Monetary Policy later, which will include their updated and revised forecasts.

US Nonfarm Payrolls is also around the corner.

Meanwhile, from a top-down analysis across the time frames, there is a bearish bias in the anticipation of a monthly correction, an analysis that can be revised from a prior article, here: AUD/USD Price Analysis: Bears still need to take caution.

0.7455/7503 is a key area on the downside, with a confluence of prior lows and a 38.2% Fibonacci retracement of the monthly bullish impulse. 

Monthly chart

Meanwhile, from a daily basis, the price is trapped between support and resistance but has been rejected by the 61.8% Fibonacci level of the prior bearish impulse between the highs and lows.

A break below support opens risk to the next support structure.

How far the Aussie might fall will depend upon not only commodity prices, nor market's risk appetite, but also the US dollar at this juncture. 

DXY daily chart

However, the US dollar rallied beyond the prior resistance into a new resistance where the price would be expected to decelerate and potentially tail off in a correction of at least a 38.2% Fibonacci retracement. 

In doing so, this could make for opposiging forces for AUD/USD bears.