AUDJPY and AUDUSD, H1 and Daily
RBA left policy unchanged, as it had been widely anticipated, which leaves the cash rate at 1.50%, where it has been since August 2016. Governor Lowe’s statement signalled an ongoing neutral policy bias with a view to eventually tighten. The statement highlights slightly upward revisions to RBA growth projections, which is seen averaging 3.5% over 2018 and 2019 before slowing in 2020.
Overall positive business conditions are noted in both the global and domestic economies, but the statement notes the risk being posed by the direction of trade policy in the US and Australia, the outlook for consumption growth, with household income growth remaining low and debt levels high. Lowe also drew attention to the impact of Australia’s drought. The outlook for employment is deemed to be good, with the jobless rate seen dropping to 4.75% by 2020, although only a gradual pick up in wages is foreseen. Inflation is noted as remaining benign, with underlying CPI average 1.75% over the past year, with only a gradual acceleration expected over the next couple of years. The central scenario is for CPI to pick up to 2.25% in 2019, and a “bit higher” in 2020.
Australian markets have been little impacted by the policy decision and statement. AUDJPY is few pips below highs posted on Friday, with next Resistance levels coming at 82.14 (200-day SMA) and 82.35 (September 21 high). AUDUSD on the other hand, consolidates around the 0.7220 area, as directional ambition looks to be curtailed into today’s midterm elections in the US, which carries potential implications for Trumpian economic policy should the Democrats wrest control of the House.
Andria Pichidi
Market Analyst
HotForex
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