Firstly, a look at the AUD/USD since the Statement on Monetary Policy (The Reserve Bank of Australia (RBA) Statement on Monetary Policy 6 February 2015 key headlines – includes a link to the full text if you want to read that also)
AUD/USD popped above 0.7850 to trigger some stops up there. It didn’t follow through (59 the high I saw) but the pullback is so far limited to around 0.7825 where there is short-covering still be done:
- More stops clustered above 0.7860,75 and then above 0.7900. sellers layered 0.7860/0.7900
- buyers as noted around 20/25 then 0.7790
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Some more on the statement:
Sees GDP growing 2.25-3.25 percent pace through December 2015, then speeding up to 3-4 percent next year
- Compares with a previous forecast of 2.5-3.5 percent for 2015 and 2.75-4.25 percent for 2016
- Weaker outlook implies that the unemployment rate is likely to rise further and peak later than earlier expected
RBA CPI outlook lowered to reflect lower oil prices & weaker labour and consumer markets:
- Says underlying inflation well contained in its 2-3 percent target band in 2015 and 2016 (had 2.25-3.25 percent previously)
On the housing market … well aware of the risks … record-low borrowing costs spur speculative activity … will need to be watched carefully … working with other regulators to assess and contain economic risks
Also note the RBA’s forecasts are based on the following assumptions of market prices:
- AUDUSD at 78c,
- AUD trade weighted index (TWI) at 64
- Brent at $59
Lower results from any of these should mean a boost for GDP