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RBA Rhetoric Supported the Quotes of the National Currency

2/7/2023 10:44 AM

The AUD/USD pair shows a noticeable increase, correcting after a three-day decline, as a result of which local lows from January 6 were updated. The reason for the emergence of upward dynamics for the instrument today was the results of the meeting of the Reserve Bank of Australia (RBA), at which, as expected, it was decided to raise the interest rate by 25 basis points to 3.35%.

In the follow-up statement, the regulator also pointed to the possibility of further tightening of monetary policy to combat high inflation. The RBA's current forecasts suggest that consumer price growth in 2023 may decline to 4.75% and fall to the 3.0% region by mid-2025. The Bank fixes stable trends towards lower inflation in the medium term, and therefore wants to consolidate or even accelerate this effect through an additional increase in the cost of borrowing in the spring of this year. At the same time, the RBA does not expect a noticeable recovery in economic growth rates. As before, the regulator expects that the Gross Domestic Product (GDP) will slow down to about 1.5% over the next two years. Officials also noted a rather tense situation in the labor market: many companies in Australia are still experiencing difficulties in hiring staff, although certain positive trends are emerging here as well. However, the RBA expects the Unemployment Rate to rise gradually from 3.5% to 4.5% by mid-2025.

On the D1 chart Bollinger Bands are trying to reverse horisontally. The price range is expanding, while remaining spacious enough for the current activity level in the market. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its lows, indicating the risks of oversold Australian dollar in the ultra-short term.

Resistance levels: 0.6950, 0.7000, 0.7050, 0.7100. | Support levels: 0.6900, 0.6850, 0.6800, 0.6750.

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