The AUDUSD pair is muted as traders reflect on the RBA interest rate meeting. The pair is trading at 0.7132, which is above yesterday’s low of 0.7075.
In the RBA interest rate decision delivered today, the bank left interest rates unchanged as most analysts were expecting. It also left the target of the 3-year yield at 0.25%. Importantly, since the yield had moved above the target, the bank said that it would purchase more Australian government bonds in the secondary market. The RBA committed to maintain the target for as long as necessary.
At the same time, Philip Lowe warned that the economy is set to decline by 6% this year while the unemployment rate will rise to 10%. He also expects that the rate of inflation will remain below the 2% target for a while. In the statement, he said:
“A stronger recovery is possible if progress is made in containing the virus in the near future. This progress would support an improvement in confidence and a less cautious approach by households and businesses to their spending.”
Earlier on, the statistics bureau had released strong trade and retail sales numbers. In total, retail sales climbed by 2.7% in June after rising by 16.9% in the previous month. This growth was better than the 2.4% that traders were expecting. Another data showed that Australia exported more goods in June, leading to a trade surplus of more than $8.2 billion.
The biggest risk for Australia and the AUDUSD is that the number of cases in Victoria has continued to rise. That has forced the government to isolate the state, which is responsible for a quarter of the country’s GDP.
AUDUSD technical outlook
The four-hour chart shows that the AUDUSD pair has declined from the last month’s high of 0.7225 to 0.7073. The price is above the ascending trend line that is shown in green. This line connects the lowest point on June 29 and July 14. The current price is along the 50-day EMA and slightly above the 100-day EMA.
Therefore, since there is no other major economic data today, I suspect that the pair will be in a consolidation mode today.
However, a move below yesterday’s low of 0.7075 will invalidate this trend. It will mean that there are more sellers in the market, who will be keen to push the price below 0.7000.