RBA Analysis in Spotlight Amid Rate Hike Talk
As the market gears up for the RBA Chart Pack release on Wednesday (June 19), investors are focused on potential implications for the AUD/USD. Governor Michele Bullock’s recent hawkish remarks indicating discussions on interest rate hikes have stirred up anticipation.
The detailed graphs in the Chart Pack covering Australia’s economic landscape, including information on key trading partners like China and commodity trends, are expected to offer valuable insights impacting the AUD/USD exchange rates.
Examining the Effect of China on the Australian Dollar
China’s economic slowdown continues to be a key factor influencing the Australian economy. With China being a significant recipient of Australian exports, any deterioration in Chinese economic indicators could have ripple effects on Australia’s labor market and overall domestic spending.
Considering the trade-to-GDP ratio of over 50% in Australia and the substantial workforce engaged in trade-related jobs, any softening in demand from China could pose challenges for the Australian economy.
Focus on US Economic Calendar and Fed Updates
Looming over the market on Wednesday is the US housing sector, particularly the NAHB Housing Market Index, which is expected to remain stable. Amid speculations on a potential Fed rate cut, a positive outlook for the housing market may enhance consumer confidence and drive spending, possibly impacting inflation and interest rate decisions.
The intricate balance between Fed rate decisions, consumer spending patterns, and economic outlook will play a crucial role in shaping the future market trends.
Short-Term Market Projection
In the near term, movements in the AUD/USD pair are likely to be influenced by central bank communications and PMIs from both Australia and the US. A concerning economic data from the US could tilt investor perspectives towards a potential September Fed rate cut, possibly favoring the Aussie dollar.
Considering the RBA’s contemplation of raising interest rates, a weaker US economic performance might drive the AUD/USD towards the $0.67 support level.
Analysis of AUD/USD Price Trends
Daily Price Movement
The AUD/USD currently hovers above both the 50-day and 200-day EMAs, hinting at a bullish trend. A breakout beyond the $0.66500 mark could pave the way for a climb to the $0.67003 resistance, with further potential for a push towards $0.67500.
However, a breach below the 50-day EMA might signal a decline towards the 200-day EMA and the $0.65760 support level. Presently, with a 14-day RSI reading of 54.70, the AUD remains poised to reach $0.67500 before entering the overbought zone.
