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AUDUSD Market Update

8/2/2022 11:51 AM

The Australian dollar shows an active decline against the US currency, correcting after intensive growth the day before.

Investors closed most of their long positions ahead of the Reserve Bank of Australia (RBA) meeting, at which, as expected, it was decided to raise interest rates by 50 basis points to 1.85%. In a follow-up statement, the members of the Bank's board noted their commitment to a course towards a gradual reduction in inflation, which remains one of the main risks for the national economy. The regulator's forecast assumes that in 2022 prices will continue to grow, reaching 7.5% by the end of the year, in 2023 the consumer inflation rate may drop to 4%, and in 2024 it will return to the target range of 2-3%. The RBA also noted a fairly solid labor market, which, however, is experiencing a number of problems as economic growth slows down, in connection with which the Bank expects a moderate increase in the Unemployment Rate in 2024 to 4% from the current 3.5%, which is the minimum over the past 50 years. As for new interest rate increases, the officials did not limit themselves to any framework, noting that the decision would be made based on the current economic situation.

The latest report from the Australian Competition and Consumer Commission (ACCC) predicts a significant decline in LNG supplies, noting that domestic energy security is at risk, especially in the east of the country. As the energy crisis escalates, local businesses will be forced to shut down and households could be left without enough gas as early as 2023 if producers don’t redirect part of the non-contractual "blue fuel" to local consumers, analysts say. The shortfall is now estimated at 56 petajoules, or 10% of the East Coast gas market. Negative dynamics may, in turn, become a catalyst for further price increases and the withdrawal of some manufacturers from the market.

Bollinger Bands in D1 chart show quite active growth. The price range is narrowing from above, reflecting the emergence of ambiguous dynamics in the short term. MACD reversed towards declining, preparing to form a new sell signal (the histogram should be located below the signal line). Stochastic shows a more confident decline, signaling in favor of the development of corrective dynamics in the nearest future.

Resistance levels: 0.7000, 0.7050, 0.7100, 0.7150. | Support levels: 0.6950, 0.6900, 0.6849, 0.6800.

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