AUSTRALIAN DOLLAR TALKING POINTS
AUD/USD slips to a fresh yearly-low even as the Reserve Bank of Australia (RBA) starts to change its tune, and the exchange rate now stands at risk of exhibiting a more bearish behavior over the days ahead as it snaps the range-bound price action from the start of the summer months.
AUD/USD FORECAST: BEARISH BEHAVIOR TO PERSIST AS SUMMER RANGE SNAPS
AUD/USD struggles to hold its ground after failing to test the July-high (0.7484), and fresh developments coming out of Australia may do little to prop up the local currency as updates to the Wage Price Index (WPI) is expected to show household earnings holding steady at 2.1% for the fourth consecutive quarter.
Signs of subdued wage growth should keep the RBA on the sidelines throughout 2018 as ‘household income has been growing slowly and debt levels are high,’ and Governor Philip Lowe & Co. may continue to tame bets for an imminent rate-hike as ‘the low level of interest rates is continuing to support the Australian economy.’
Keep in mind, the latest remarks from the RBA suggest the central bank will gradually alter the forward-guidance for monetary policy as ‘the central forecast is for inflation to be higher in 2019 and 2020 than it is currently,’ and Governor Lowe & Co. may start to strike a hawkish tone later this year as ‘the rate of wages growth appears to have troughed and there are increased reports of skills shortages in some areas.’
As a result, market participants are likely to pay increased attention to the RBA’s quarterly Statement on Monetary Policy due out on August 10, with AUD/USD at risk of exhibiting a bearish behavior as the exchange rate snaps the summer range and initiates a series of lower highs & lows. Interested in having a broader discussion on current market themes?
AUD/USD DAILY CHART
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